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To keep your finances on track in 2023 — here’s what not to do.

Key points

• Sticking with mediocrity financial products when there are better options available could cost you a significant amount of money.
• Procrastination keeps many people from starting good financial habits, such as investing regularly.
• Being wasteful with your money and getting into credit card debt can also wreck your finances.

Some financial decisions don’t make a big difference in the grand scheme of things. Went over your grocery budget one weekend because you had family over? It’s pretty easy to get back on track. But other ones can do some serious damage, potentially costing you thousands of dollars.

With a new year starting, it’s good to be aware of things that can wreak havoc on your personal finances. Here are the ones to watch out for.

1. Sticking with lousy financial products

The average savings account rate is 0.30% as of Dec. 19, 2022, according to the Federal Deposit Insurance Corporation (FDIC). Some high-yield savings accounts, on the other hand, are offering 3.5% or more, over 10 times higher.

And yet, only 21% of adults have a high-yield savings account. Everyone else is settling for average — and missing out on a whole lot of interest they could be earning. If you have a $15,000 emergency fund in a savings account, the difference in rates could be worth it over $500 per year in interest.

This is just one example of how it could cost you money if you don’t shop around for the best financial products available to you. Here are a few others:

• Top rewards credit cards can get you 1.5% to 2% back on your purchases. Depending on how much you spend, this could save you hundreds of dollars per year.
• Fees for investment funds, such as mutual funds, can range from 0.25% or less to over 1%. Picking a fund with lower fees could be worth hundreds of thousands over decades of investing.
• The average auto insurance policy costs $2,785 per year. Rate shopping regularly could save you hundreds of dollars per year.

2. Procrastination

Everyone deals with procrastination. When you’re in high school, it usually involves waiting until the last minute to write a paper or study for a test. Once adulthood hits, lots of people deal with procrastination when trying to start new financial habits. You could find yourself posting things like saving money every month, contributing to your employer’s 401(k) offers, or investing through a brokerage account.

It’s one thing if you just don’t have the money at the moment. But even those who can spare the money often tell themselves “I’ll do it later.”

The problem is that “later” usually ends up getting pushed back further and further. If there’s a financial habit, such as investing, that you know will benefit you, get started ASAP.

3. Being wasteful with money

Your spending habits are a crucial factor in your financial success. If you’re wasted with money, it makes saving much more difficult.

This doesn’t mean you need to go on a super strict budget where you never treat yourself to anything. Wasteful spending refers to those things you spend money on even though they don’t enrich your life. One example is making an impulse purchase solely because something’s on sale. Another common one is paying for monthly services you’re not using.

There are a couple of good steps you can take to solve this problem. First, set a limit on how much you can spend on discretionary expenses, such as 20% or 30% of your income. If you decide on a limit and stick to it, you won’t spend more than you can afford.

It also helps to think about how you want to spend your money. When you know what types of purchases will really improve your life, you’re less likely to spend on things that aren’t going to make you happy.

4. Credit card debt

Credit card debt is one of the most dangerous types of debt, for several reasons. It’s easy to get into debt with credit cards. They let you spend up to your credit limit, which could be much more than you can afford to repay. You only need to make small minimum payments to stay current on the account, so there’s no fixed timeline to pay back what you owe.

But the real kicker is credit card interest. Most cards have high interest rates, with many charging an APR of 18% or more.

In 2021, the average credit card debt was $5,221. If you paid that off over two years on a card with an 18% APR, it would cost you $1,035 in interest.

If you don’t have any credit card debt, numbers like that are good motivation to keep paying in full every month. And if you need to get out of credit card debt, make that one of your main goals for 2023. Take some time to calculate a payment plan, and consider options to save money by refinancing your debt, such as:

These are all common problems that can get in the way of your money goals in 2023. The good news is that now that you’re aware of them, you can make sure to avoid them, or take steps to resolve any that are currently causing financial issues for you.