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, financial bad habits to change go far beyond overspending. Review these five financial mistakes to change the way 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 own taxes, thus skipping the fees of paying a tax preparer. However, when you do your own taxes, you miss out on the most valuable part of hiring a tax preparer: their advice. By the time you bring them your paperwork, you've probably 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 greater share of your wealth. This service more than pays for itself over time. 

Not Budgeting Consistently 

Budgeting is the biggest personal finance habit to get right: once you are in control of your saving 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 real situation. Whenever you really understand your cash flow, debts, and assets, you'll make smarter personal finance decisions throughout the year.

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 car should your become totaled in an accident. If buying a new car wouldn't be financially feasible, then 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 term, which is 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 lifetime of the policy than makes sense. Term life insurance is fairly inexpensive, provided you're healthy and purchase a policy when you're young.

When you invest in life insurance, make sure you're purchasing enough coverage to really protect your loved ones if something happens to you but not so much that you can't afford the annual premium. If you wind up canceling the policy prematurely to save money, you'll be charged a higher rate moving forward. 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 wellbeing. However, you can adopt these good habits anytime you need to refresh the way you handle your finances.