Many people underestimate the compounding costs of a single poor financial decision. Whether that decision is buying a house without sufficient funds for it, investing in something that shouldn’t be invested in, or simply using your credit card too much too often, a poor financial decision can severely impact many parts of your financial future.

Always Increasing Debt Load

Once you’ve spent too much on a credit card, the interest from that credit card debt can add up fast. Interest rates on most credit cards are extremely high, so if you don’t pay it off quickly the costs rise. Not keeping up on payments can lead to a debt burden that will always hang over your head far into the future.

Poor Credit Score

Not only will debt and poor finances affect your mood and future finances, but they will also affect your credit score. Having a poor track record can decrease your credit score, meaning that you won’t be accepted for the more appealing loans or opportunities that come with good credit. Other actions such as bankruptcy will affect your credit score and future purchases.

No Retirement Planning

Having solid finances should mean that you’re able to budget some money for retirement. But with a bad financial decision, you might not have the funds to be able to put money into a retirement fund that will accrue interest over time. Getting money into a retirement fund early is critical, as these generally compound over time – so the longer you have money in, the more you gain from that original investment. A single financial misstep can set you back potentially thousands of dollars.

No Chance For Investing

Similarly to retirement planning, you need stable finances to invest comfortably. Smart investments can set you up for life, but in order to get those investments, you need to have a safe, stable financial net. Without good finances, you won’t be able to invest without accruing large brokerage fees.

No Emergency Fund

Every personal finance manager recommends saving up for an emergency fund, which is enough money to allow you to live for at least three months without a job. This fund is just in case you get critically injured or laid off of your job. But with a bad financial decision, you may not have the money to save that emergency fund.

Balancing smart financial decisions with risky ones is absolutely critical for making sure your future is stable and secure. While a single poor financial choice may not seem like such a bad idea at first, there are a multitude of ways that could affect you long term. It’s always good to be aware of the ways your future could be impacted.