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3 Using habits that destroy your chances at retirement – The Motley Fool

Retirement is a dream that many people simply cannot afford, as savings rates are depressingly low. Half of adults aged 55 and over have no pension savings under the US Government Accountability Office, and only 28% of US adults are considered financially healthy, researchers from the Financial Health Network found.

Of course, part of the reason it's hard to save is because there's simply not enough money to go around. The median income for the 25 years and over is about $ 50,000 per. Year, according to U.S. Pat. Bureau of Labor Statistics. When you have a seemingly endless list of bills to pay, the money doesn't go as far as you want.

Having said that, even if you are on a tight budget, there are ways to stretch every dollar. And even if you think you don't have the money to save, there are a few common spending habits that can harm your financial health.

  Young man with money flying out of his wallet.

Image Source: Getty Images. 19659006] 1. Buy things just because they are for sale

It's easy to get caught in a sale. When you see these magic "50% off" or "buy one get one free" phrases, it's tempting to buy something simply because it's for sale. If you really need that topic then there's nothing wrong with utilizing a good discount. But if you buy it now and hope you use it later, you just waste money.

The average American spends about $ 450 per. Month on impulse purchase, according to a study from the Slickdeals sharing platform. It's about $ 5,400 a year, or $ 324,000 over a lifetime. Nearly two-thirds of those who act impulsively said they did it because they got a lot on the product, and 40% said they had bought something on impulse simply because they had a coupon for it.

Again, if these purchases are things you actually need, there is no harm in the pursuit of an agreement. But unnecessary purchases can result in much lost potential. Instead, if you put $ 5,400 a year, you can use impulse purchases for your savings, money could go a long way towards retirement. For example, say you save $ 5,400 a year on a pension account earning a 7% annual return. Over 30 years you will have about $ 510,000 stashed away.

2nd Not Paying Attention to the Small Things

You may justify spending money each month at "small" costs and believing that $ 10 here and there probably won't hurt. But these costs can quickly add up, and before you know it, you spend hundreds of dollars a month on "small" things.

These little things can include costs such as subscription services, takeout, a gym membership you rarely use, etc. Individually, they cannot add up to much. But combined – especially when considering how much you spend in the long term – can make it difficult to save for the future.

To find out if you are wasting money on these seemingly lesser expenses, take a fine-tooth comb to your budget. You can either write all your expenses in the old fashioned way or use an app to track your expenses, but the important thing is to determine exactly where all your money goes. Then cut down any costs that aren't really necessary (or at least try to cut down). If you absolutely love to eat out, you don't have to remove it altogether – but try to cut down so you don't spend as much as you are now.

Even though you can just save an additional $ 100 a month by cutting out the little things you are wasting money on that money can go further than you think when you invest it in your pension fund. By saving just $ 100 a. Month, earning a 7% annual return on your investment, you can collect around $ 113,000 in savings over 30 years.

3rd Spending extra money just because you have it

When you get a bonus at work or receive your tax refund, the first thing you might want to do is splurge on a fancy holiday or the expensive new phone you don't need but really want. While there is no damage in the treatment of yourself once in a while, make sure you do not spend at the expense of your financial future.

When saving for retirement, you may be able to tell yourself that you will save more when you start making more money. But then when you start earning more money, you can convince yourself that you need more because you deserve it as a reward for your hard work. As your income increases, it is easy to fall into the trap of spending more simply because you have more to spend.

A quarter of US households earning $ 150,000 or more a year are living paychecks for pay slips, according to a Nielsen Global Consumer Insight survey that shows that money doesn't necessarily solve all your financial problems. If you do not spend your money wisely, you can end up spending more than you can afford, not leaving anything to your retirement fund.

Saving at retirement is not easy, no matter how much money you have. But if you unknowingly waste money on things you don't need, these bad habits can end up costing you thousands of dollars in lost potential. But when you are aware of the problem and start taking steps to correct it, you will be in a much healthier financial situation.

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