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Financial Blunders to Avoid and Habits to Break

August 7, 2015

In a world where the vast majority of transactions are now digital, old-fashioned methods of monitoring cash flow are less commonly practiced habits. When was the last time you balanced your checkbook? Do you know how much money you have in your wallet? When making purchases is as easy as swiping your card and account balances are accessible on-the-go, it can become easy to spend mindlessly and neglect the responsibility to develop money-savvy practices. In the technological age, it’s important to remember to slow down and reevaluate your habits in order to avoid major financial blunders.

Living on a budget requires advanced planning, but is worth the effort. Comfort can be found in knowing funds are available when needed, and so-called “financial surprises” will be less likely to catch you off guard. When establishing a budget, it is crucial to be realistic and consider the big picture. Be sure to accurately estimate your monthly income, and factor in all expenses. While groceries, gas and monthly bills are major elements of the equation; remember that budgeting for unexpected costs is just as necessary. Routine car maintenance or previously scheduled appointments may sneak up on you, throwing your budget off course. However, planning ahead will keep you one step ahead of a budget blunder.

Always be mindful that seemingly small purchases do add up and can steer your budget off track. Patterns of spending a couple dollars here and a couple more there may not seem problematic at the time, but come the end of the month you may realize the dent in your budget. A survey conducted by Accounting Principles found that two thirds of American workers buy their lunch instead of bringing one from home. On average, this costs nearly $2,000 per year, as opposed to the $4 lunch that can be made at home and cost only $1,040 per year. These purchases add up quickly, and can take a toll on your financial security.

The quality of your budget and your willingness to abide by it has a direct impact on your debt ratio. When the available funds do not suffice, charging expenses to your credit card may be necessary. However, it is important to factor paying off debt into your monthly budget in order to avoid financial trouble. The “out of sight, out of mind” mentality is easy to fall into. Routine payments are necessary in order to stay on top of debt and should be viewed as a primary monthly expense. Neglecting payments or carelessly increasing the credit card balance can create a habit that is difficult to break. Avoid this financial mishap and have peace of mind knowing you are in control of your finances, rather than feeling like your debt controls you.

When a budget is in place and spending is on track, some may believe that habitually monitoring their credit score is a trivial task. That thought in itself is a financial blunder. Not knowing one’s credit score can be financially detrimental. Credit card numbers and personal information are in high circulation, and well-know companies have experienced information breaches. Identity theft is a real risk in today’s world, and knowing your credit score is one way to be proactive in preventing fraud. Additionally, credit scores are important when applying for a loan or line of credit, and a poor credit score can be detrimental to future plans.

Being aware of your financial habits is an important step in avoiding practices that can place a heavy burden on your financial wellbeing. The quicker financial blunders are detected, the easier it is to make necessary changes. While the digital age we live in brings many distractions that can send our financial plan off course, it also provides a variety of budgeting and credit monitoring resources that can assist you in your financial endeavors. In addition to these resources, local banks can provide you with educational tools so that you can make smart choices to better your financial future.

James Oosterman is the Vice President of Melrose Bank. He can be reached by telephone 781-665-2500, online at or on Facebook at

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