5 Bad Financial Habits You Should Quit in 2016

photo-1449182325215-d517de72c42dQuit looking at the market every day. Some people watch the markets and check the value of their accounts every day – sometimes multiple times a day. You know who you are.

Unless you have nerves of steel, watching the daily, weekly or even monthly gyrations of the market will inevitably tempt you to take actions that may not be in your best long-term interest.

Unless you are speculating and trading individual stocks, short-term events should rarely affect your long-term investment decisions. I believe this is especially true if you own diversified mutual funds or invest in a broad index of the market.

If you have tied your fortune to the performance of one or two stocks, you will want to pay close attention to the news. Otherwise focus on the long-term and try to ignore the short-term distractions.

Quit ignoring your finances. Other people never look at the market or review their financial accounts. Personal finance and investing may not be your thing, but you should take a look at where you stand from time to time.

Spend five to ten minutes reviewing your monthly account statements especially your 401(k), your bank account, and investment accounts. Reviewing your monthly statements will give you get an idea of what’s going on with your money and if there’s been any unusual activity in your accounts.

You should also sit down and do a thorough review of your financial plan and investment accounts once or twice a year.

Are your investments still in line with your goals and risk tolerance? Would your portfolio benefit from a rebalance? Do you have investments that should be replaced? Added? A regular review of your accounts and financial plans will help answer these questions.

Quit giving yourself negative messages. Negative messages and limiting beliefs are probably a greater threat to your long-term financial security than the stock market, inflation, and your mutual fund expenses combined.

Tony Robbins, the self-help guru and personal development expert, encourages people to change their story. We all have a story that we tell ourselves about our relationships, our careers, our personal finances, etc.

Maybe your story goes something like this: “Only the rich people really get ahead in this world”. Or “the markets are rigged”. Or “I will never be able to retire”.

Repeating those messages in your head is a habit that can be hard to break. It can also be devastating to your financial security.

What if you changed your story from something negative to something positive?

For example, “I can’t control my investment returns, but I will increase how much I add to my 401k or IRA”.

Or…

“I may not be able to retire early, but if I continue to save regularly I will be able to retire by age 65”.

Quit listening to the person in the next cube. We all have that neighbor, friend or coworker who seems to have it all figured out. At least we think they do. They make a lot of money. They are always reading the financial papers. And they talk like they actually know what they are talking about.

They must have it all figured out, right? Well sometimes, but not always.

It’s OK to listen to others and get ideas from them, but take it all with a grain of salt and verify the facts. Even if your friend does know what she is talking about, what’s right for her may not be right for you.

Make yourself a smart consumer of financial information, and you will soon be able to sort fact from fiction the next time you get a big financial tip.

Quit Comparing Yourself to Others. I fall for this habit all the time. In some ways it motivates me to aspire to greater things. But usually it just makes me feel insignificant and takes the wind out of my sail. Worse, it makes me envious of others rather than grateful for what I have.

When your younger brother pays off his house and retires early, congratulate him. When a friend buys a second home, send them a housewarming gift.

Their success doesn’t equate to your failure.

Maybe they had different opportunities or made different choices. Maybe they are stretched to the limit or have a mountain of debt that you don’t know about. Maybe they really are more successful than you. Get over it. You will be happier when you do.

New Year. New Opportunities. A new year is a new opportunity to start fresh and get refocused on your most important goals. Quit the habits that have been holding you back and 2016 may be your best year ever.