Poor financial habits can sabotage your attempts to build wealth, save for retirement, and pass on a legacy. While most people understand they should be saving more and spending less, bad financial habits to change go far beyond overspending. Review these five financial mistakes to change how you manage your money in the upcoming year. 

DIY Estate Planning

To protect your legacy, you need a will. DIY or do-it-yourself will kits promise to make the process easy and cheap, but there are reasons legal professionals specialize in estate planning. DIY kits don't factor in everything and may not be the best way to distribute your assets after you die or plan for your medical care should you become incapacitated. The outcomes of DIY estate planning range from high tax bills after you've passed on because things weren't structured right to a family feud when loved ones disagree over the will. Protect yourself and protect your family by paying professionals for estate planning needs. 

DIY Tax Preparation

Tax preparing software makes it easy for you to complete your taxes, thus skipping the fees of paying a tax preparer. However, when you do your taxes, you miss the most valuable part of hiring a tax preparer: their advice. When you bring them your paperwork, you've missed your chances to lower your tax liability. You've got to pay the bill, even if it's more than you anticipated. Incorporating their advice moving forward, you can lower your tax liability using legal strategies to preserve a more significant share of your wealth. This service pays more than it pays for itself over time. 

Not Budgeting Consistently 

Budgeting is the biggest personal finance habit to get right: once you control your savings and spending, you're less likely to be caught off-guard by an expense. However, people aren't always consistent with budgeting. If you've gotten away from reviewing expenses and adjusting budgets, commit to reviewing your numbers at the start of every year. Change your numbers to reflect your actual situation. You'll make smarter personal finance decisions throughout the year if you understand your cash flow, debts, and assets.

Being Underinsured

Purchasing only the minimum amount of insurance seems like a good strategy for saving money, but it can backfire and cost you if you need to use your insurance. If you skimp on collision coverage for your car, for example, you must have savings to purchase another vehicle should you become totaled in an accident. If buying a new car isn't financially feasible, you'd better reinstate that collision insurance just in case.

Buying Bad Life Insurance

Life insurance is sold as whole life, which covers your entire life, or a term valid for a specified term, such as 30 years. Whole life insurance is rarely a good idea, as you'll often pay far more over the policy's lifetime than makes sense. Term life insurance is inexpensive, provided you're healthy and purchase a policy when you're young.

When investing in life insurance, ensure you're purchasing enough coverage to protect your loved ones if something happens to you, but not so much that you can't afford the annual premium. You'll be charged a higher rate if you cancel the policy prematurely to save money. Since policy rates are static for the term but increase with age, those who take out life insurance when they are older typically pay more per year than younger clients. 

Understanding these five personal finance mistakes will help you examine where you're doing everything you should and where you need to change your behaviors. The new year is a good time to review the year's decisions and make positive changes that improve your financial well-being. However, you can adopt these good habits anytime you need to refresh how you handle your finances.