10 Really Bad Money Habits That Are Keeping You Poor

2024-10-05Last Updated: 2024-10-05

Money. We can’t live without it yet can’t seem to get any of it into our savings accounts either. While we know money is important, that doesn’t stop us from making bad spending decisions, and we find ourselves struggling financially.

Recognising and breaking bad money habits that include overspending, not budgeting, and not saving or investing is key to anyone who wants to improve their financial situation. In this article, we will look at 10 bad money habits that are keeping you poor.

DON’T MISS: The 6 Best Ways to Improve Your Financial Health

1. Living Above Your Means

One of the worst money habits is living above your means. This occurs when your spending is more than your income, and you’re in debt and stressed. It’s easy to keep up with the latest things and gadgets, but you have to budget and live within your financial capabilities. Non-essential spending will empty your bank account and you’ll never save for emergencies or future goals.

2. Not Budgeting

Not budgeting is another big money mistake. Budgeting is the foundation. It helps you see how much you’re bringing in and how much you’re spending, so you don’t spend too much and get into debt. It allocates money for bills and savings and gives you a view of your finances.

Quick Note!

If you don’t know how to create a budget, this post can help you to do it!

3. Impulse Buying

Impulse buying is the silent thief of poverty. It’s buying on emotions not needs. To combat this, make a shopping list before you go to the store and avoid online shopping when you’re stressed or bored. Impulse buys add up over time and take money away from more important financial priorities like paying off debt or saving for the future.

4. Ignoring Savings

Not prioritizing savings is a big money mistake. Saving is essential for emergency fund, investing, and achieving long-term goals. Save at least 20% of your income and automate it, so it happens consistently. Remember, without enough savings, unexpected expenses can force you to rely on credit cards or loans.

5. Relying on Credit Cards

Using credit cards too much is another bad money habit that are keeping you poor. Credit cards are good for credit, but bad when used recklessly. Use credit cards smartly, pay the balance in full each month, and don’t use them for non-essential stuff. High credit card debt means interest payments and less savings and investing.

6. Not Investing

Not investing is a money habit that prevents wealth. Investing makes your money grow over time and security for the future. Learn about investing and talk to a financial planner. Without investing, you miss out on returns that will make a big difference to your long-term finances.

7. Paying Debt Minimums

Only paying debt minimums is a habit that extends debt and interest. Pay more than minimums to pay debt faster and interest long-term. Paying minimums keeps you in debt as most of your payment goes to interest, not principal.

8. Not Tracking Expenses

Not tracking your expenses is another bad habit. Without tracking, you can overspend and lose sight of where your money is going. Use apps or spreadsheets to track your spending and see where you can cut back. Tracking expenses keeps you accountable and makes you make informed decisions, so you don’t waste money.

9. Skipping Financial Education

Not learning financial education is a habit that keeps many people poor. Learning basic financial principles like budgeting, investing and debt management is key to making informed decisions. Take advantage of free online resources, books and courses to level up your financial literacy. Lack of financial knowledge means poor decisions and missed opportunities for wealth building.

If you don’t have a financial background, the good news is that there are plenty of articles in Financial Literacy section! Educating yourself on it is a must to improve your financial knowledge.

10. Putting Off Financial Decisions

Procrastination is a big obstacle to financial happiness. Putting off big financial decisions – like saving for retirement or making a budget – can lead to missed opportunities and financial uncertainty. Do it now and you’ll be set for life. The sooner you do financial things, the less last-minute financial panic.

How to Break These Bad Money Habits

Breaking bad money habits means being aware, disciplined and intentional. Here’s how to do that:

Know Your Habits: Look back and see which bad money habits are holding you back.
Goals: Set specific goals so you have something to work towards.
Plan: Plan how to break each habit. That might be a budget, automation or a financial planner.
Accountability: Tell a friend or family member so they can hold you to it.
Learn: Keep learning about money so you don’t fall back into old ways.

Final Thoughts

Bad money habits affect both your finances and your life. Know and fix them and you’ll be in control and wealthy. It’s never too late to change your financial habits and start building wealth. By prioritizing financial education, creating a plan, and staying disciplined, you’ll break those bad money habits and be financially free. Do all this every day and you’ll be over those bad money habits and wealthy.