Financial self-sabotage comes in many forms, here are the top 3 ways you may be sabotaging your long-term goals — and how to stop.
When you think of “financial self-sabotage” your mind may go to impulse spending on clothes, taking on too much credit card debt, or even keeping too much money in cash because it feels “safe.” The truth is there are countless ways we can torpedo our financial efforts — and many of us may be self-sabotaging financially without ever realizing it. But anytime we take an action that prevents us from reaching our financial goals, it’s technically a form of sabotage — and one of those actions could be inaction.
Sarah Newcomb takes it one step further and says that even when we do something innocuous (like prioritizing saving for a child’s college education over our own retirement) that is a form of self-sabotage. She shares the top 3 ways you may be financially self-sabotaging without realizing it, and how to stop:
INVESTING LESS AGGRESSIVELY AS WE AGE
Ever heard the advice that your investments should become less aggressive (“safer”) as you get closer to retirement? Newcomb says if you’re playing it too safe in the market, it’s likely you’re financially self-sabotaging.
“The reality is that with a 3% inflation rate, prices double every 24 years,” Newcomb says. “So, if you retire at 65, and your lifestyle costs you $100,000 then when you’re 89, it will take $200,000 to live that same lifestyle.” She offers the caveat that while you’ll be living a different lifestyle at 89 than you were at 65 (likely in terms of travel expenses, or being active) you’ll probably be spending more on health care.
As you get closer to retirement, it’s always a good idea to sit down with a financial advisor to run the numbers. While you can’t plan for how much inflation may cut into your cash reserve, you can make sure that your money is going to continue to grow to be able to care for your long-term needs. So, while you don’t want to be taking so much risk in the market that it keeps you up at night, you do need to be invested in stocks that will give you enough upside that you’ll have some assurance that you won’t outlive your assets.
PRIORITIZING CAREGIVING OVER OTHER FINANCIAL GOALS
One of the biggest forms of self-sabotage Newcomb sees women make is prioritizing caregiving over their own financial needs, which can also have a negative impact on mental health later in life. “What researchers have found in studying women who leave work to fill a caregiving role, is that rather than their life satisfaction increasing in retirement, it decreases,” Newcomb says.
The solution? If you can, consider staying in the workforce longer, and hiring paid caregivers if they are a viable option given your life and financial situation. This can give you the flexibility to meet your loved ones’ needs without negatively impacting your ability to save for retirement, or bank more working years to be counted towards Social Security.
PUTTING SHORT-TERM DESIRES OVER LONG-TERM FINANCIAL GROWTH
We’ve all been there: A really, really bad day happens, and we immediately head to our nearest Nordstrom Rack (or “add to cart”) to make ourselves feel better. Most of the time, it makes us feel better in the short term — but long term it’s nothing but a different form of financial self-sabotage.
Newcomb says before you buy that thing you probably don’t need, consider asking yourself if you’re lonely, bored, insecure, or sad first. “Are those things happening? Because if those things are happening, shopping won’t fix them,” Newcomb says. “But taking a bubble bath, curling up with a book, or calling a friend might.”
While shopping can be fun (and a great way to spend a few hours on a Sunday afternoon), there are plenty of other ways to fill up our time and find new things that light us up in different ways. Just remember that if shopping is used as your coping mechanism, you’re possibly cutting into the beautiful life your future self wants to live.
BOTTOM LINE
Financial self-sabotage comes in many forms, but at the core of all of them are our emotions — sometimes we have to be “selfish” and prioritize our future selves. Once you can get a better grasp on the core reasons you may be tempted to prioritize your short-term financial goals over your long-term ones, you can better plan for the future.
MORE ON HERMONEY:
- These Two Examples Illustrate the Magic of Compound Interest
- HerMoney Podcast Episode 436: How To Crush Your Life Goals At Any Age
- Investing For Beginners: 7 Tips You Need To Get Started
More money news when you need it! Get the latest and greatest updates on all things investing, budgeting, and making money. Subscribe to the HerMoney newsletter at Hermoney.com/subscribe!
Editor’s note: We maintain a strict editorial policy and a judgment-free zone for our community, and we also strive to remain transparent in everything we do. Posts may contain references and links to products from our partners. Learn more about how we make money.
