4 'Normal' Financial Habits That Are Actually Making You Lose Money

Recent surveys have shown almost half of all Americans aren't saving enough money to sustain them long-term.

That’s not difficult to believe if you’ve ever looked at your bank account balance at the end of the month, and wondered where all your money went.

It sometimes feels as if there’s a leak in your bank account, and no matter how diligent you are with budgeting, expenses crop up and seem to siphon your extra cash.

Many of us want to save more.

We have financial goals we’d like to reach.

But between paying the bills, putting food on the table and putting money away for retirement, we can’t seem to find extra wiggle room in the budget for savings.

But the truth is, most of us have a few bad money habits we can change, to free up some of that cash we work so hard to earn for savings.

Do you have any of these bad money habits?

1. Inflating your lifestyle

Think back to the last time you got a raise.

What did you do with that money?

Most people use their extra income for what financial experts call “lifestyle inflation.”

Lifestyle inflation happens when, instead of saving the extra money you make, you put it toward something to improve your lifestyle.

This is a bad financial habit that will end up costing you big-time in the long run.

For example, let’s say you received a raise of a dollar an hour each year.

If you work full-time, you work, on average, 2,000 hours per year.

So your annual increase would be $2,000.

If you received a dollar per hour raise every year for five years, you’d earn $4,000 more at the end of the second year, and $6,000 more at the end of the third.

Instead of buying a new vehicle with that money or freeing up room in your budget to visit the spa more often, start saving it.

If you were to invest that money, it would be working even harder for you.

Can you imagine how much money you’d have to pad your savings accounts if you simply saved your extra money each year?

2. Incurring credit card interest

Credit cards are a great tool.

Not only can you use them almost everywhere, but you also get to cash in on some amazing credit card perks.

That is, if you don’t engage in this budget-busting financial habit: incurring credit card interest.

Whether you’re using your credit card as a means of financing a lifestyle you can’t afford, or you simply forget to transfer the money onto your balance every month, letting yourself incur interest on your purchases is a costly mistake.

Credit cards can charge 19 percent interest or more, which means, when you carry a balance on your cards, you’re paying far more for the products you charged your credit card for than you thought you were paying at the counter.

That good deal you got on a pair of jeans or your vacation isn’t such a good deal if you tack on credit card interest.

So start paying your credit card down each month to avoid a nasty interest charge, and to free up some money for savings.

3. Opting for add-ons

Have you ever bought something you didn’t really need because it sounded like a good deal?

This is a bad financial habit most of us have engaged in.

For example, let’s say you needed to renew your cell phone plan.

The sales associate tells you that for $5 more per month, you get unlimited long-distance calling.

Five more dollars per month doesn’t sound like much, especially for unlimited long-distance calling.

So, you shrug your shoulders and upgrade.

Never mind you rarely call long-distance. Never mind Skype works just fine. Never mind you live in the same city as all your family and friends.

You’ve fallen into the add-on trap.

This is a dangerous habit to get into.

Sure, this time, it might only cost a few extra dollars, but those dollars accumulate.

If you saved the money you put toward these add-ons, you’d have a lot more in your savings account.

4. Letting your money wither in your checking account

One of the biggest savings mistakes many people make is relying on their checking account to house their money.

Keeping your funds in a checking account is one step above hiding them under your mattress, but still far from the ideal savings situation.

Checking accounts pay pitiful interest.

Your money should be working for you. The mere existence of it should generate more.

That’s what would happen in an investment account.

Your checking account, on the other hand, pays a pitiful amount of interest (usually less than 0.05 percent).

In addition, the money in your checking account is begging to be spent.

The point of a checking account is to have money easily accessible when you need to spend it.

So, when money is sitting in your checking account, it’s begging to be spent.

If you transferred it into a savings or investment account, it’s easier to forget you even have the money.

Boost your savings by transferring your money into a high-interest savings or investment account, and start making that money work for you.

Most of us have made a couple of these financial mistakes in the past, and unfortunately, they eat into our savings rates.

However, with a few small changes and an effort to be more mindful with your money, you can start spending less and saving more.