4 Frightening Financial Behaviors to Avoid

Each October, jack-o'-lanterns, haunted houses and Halloween-costumed trick-or-treaters parade through our neighborhoods. Yet, for most financial planners, it's not the ghouls and goblins that have us terrified. Rather, it's some of the scary financial moves and decisions that we see made each day by investors.

As financial planners, we strive to create a plan for each client, designed to help them achieve their financial goals and objectives. In the process, however, it's not uncommon to see a new client come into our office with a grocery bag full of old receipts, jumbled years of torn tax returns, partial account statements with coffee stains, multiple high-balance credit card statements or simply not knowing where their investments are in the first place. "I think I used to have a 401(k) from two companies ago, but I'm not sure where it is or how much is in it or if I even had one," is a phrase we encounter regularly.

While there are many financial behaviors that we hope to improve upon, here are a few of the scariest ones that are keeping financial advisors up at night.

More money going out than coming in. "My net take-home pay is $6,000 per month, but my expenses are $7,000 per month." Without a budget and a keen awareness of your monthly cash flow, how can you expect to live within your means? To set yourself up for success, create a monthly budget, reduce unnecessary spending, automate your savings and regularly monitor your progress to ensure more money is coming in than is going out.

According to the Voya Retire Ready Index, which measures the retirement readiness levels of Americans who are either working or recently retired, only 31 percent of workers and 35 percent of retirees have a comprehensive budget. That means roughly two-thirds of us have some basic budgeting work to do.

Credit card abuse. Many American households are carrying five-figure credit card balances and are paying double-digit interest rates on their debt. When your bank savings account is paying you 0.1 percent in annual interest, yet you are paying 15 percent in interest to your credit card company, it's easy to see that's a major problem for your finances.

To avoid this predicament and reign in your debt, you should only be charging on your credit card what you can afford to pay off, on time and in full each month. This way, instead of those high-interest payments going towards your credit card company, they may be directed towards savings and helping achieve your financial goals.

Insufficient savings. According to the Employee Benefits Research Institute's 2015 Retirement Confidence Survey, 57 percent of workers have less than $25,000 in household savings and investments, while 28 percent of workers report less than $1,000 in savings. This is alarming for retirees with no savings nest egg, because they are leaving themselves, sadly, with minimal choice and flexibility in retirement. Retirees are living longer than ever before, health care costs only seem to rise annually and somehow over half of workers are going to retire with less than $25,000?

To change this savings behavior, we recommend starting today and putting together an automated savings program, where investors are saving first and spending second.

No written financial plan . According to the Voya Retire Ready Index, 17 percent of workers and 26 percent of retirees have a written financial plan. That means more than 80 percent of workers and roughly three-quarters of retirees are simply hoping to achieve their financial goals without any kind of roadmap, purpose or formal plan. This is tantamount to getting in your car and attempting to drive to your destination without an address, map or navigation.

Driving aimlessly around town without knowing where you are going seems foolhardy, yet people do this with their finances all the time. Instead, set yourself up for success and give yourself a financial GPS by getting organized, defining and prioritizing your goals and objectives and creating your formal financial plan.

We often fear the most what we don't know or understand. When thinking about these scary financial behaviors, they can all be addressed with the guidance and the experience of a financial planner to help you make informed decisions. So this Halloween, let's get organized and help us overcome our financial fears. Trick-or-treat!