10 Bad Money Habits That Are Keeping You Broke
First off, what does being broke even mean?
Being broke means that you just don’t have enough money to buy what you want, when you want to.
When you look at your account balances and see you are broke. You may feel frustration or embarrassment.
The good news is that being broke is a temporary financial hardship.
Most of what we do with our money on the day to day are unconscious habits. The more aware you are of your money habits, the faster you can reach your financial goals.
You might be doing some of these bad money habits without even realizing it. So if you read this and see you do any of these bad habits. You can make the changes.
These habits are keeping you broke, and you need to quit them ASAP!
Break These Bad Money Habits That are Keeping You Broke:
- Using Credit Cards Mindlessly
- Being Comfortable With Debt
- Not Living Below Your Means
- Not Managing Your Finances
- Paying Yourself Last
- Putting Off Investing For Your Future
- Spending Extra, Due To Poor Planning
- Impulse Buying
- Emotional Spending
- Spending to Impress
1. Using Credit Cards Mindlessly
The first bad money habit that is keeping you broke is, swiping the good old plastic.
“I didn’t have time to go to the ATM.”
No problem – Visa.
“I get paid Friday.”
Thank goodness for Mastercard.
“I can collect store reward points.”
Swipe.
Swipe.
Swipe.
Buy now, pay later.
Credit cards make spending too easy.
So easy to do, yet if you do not keep track and lose control it can add up to devastating amounts of debt.
Credit card debt is hard to conquer if you do not have the funds to pay it off in full, right away, so be cautious as to what you put on your card.
How to break the bad money habit:
- Only use your credit card for purchases IF you have the money to pay for it in cash.
- Transfer the money right away through your bank’s mobile app. (Allows you to reap the miles/reward benefits)
- Remove your credit card information from online shopping sites.
- Use only for emergencies.
- Do not use it for daily expenses. (Until you have control).
- Lock cards in a safe, hide them out of sight or freeze them. (Literally put them in a cup with water, and hide them in your freezer)
- Use cash instead, for now.
- Pay in full every month.
- Pay on time – set a notice in your phone so you don’t forget.
2. Being Comfortable With Debt
“I owe a little credit card debt, so what?“
“Everyone has a car loan.”
“Student loans, because who can afford tuition anyway.”
“Mortgage, all part of being a homeowner.”
We have heard all of the above in some form or another, from family, friends, or our Banks.
We as a society are just too comfortable with debt.
Banks and big companies have normalized having debt. (So they can profit off your hard work). We are told we need an item or service, and now’s time to get it.
But that does not make debt okay, you do not and should not have to live under the thumb of a lender.
How to break the bad money habit:
- Avoid debt if you can.
- Save for big purchases.
- If you do need to borrow, look for the lowest interest possible.
- Don’t buy the latest and greatest.
- Consolidate to pay down debt faster.
3. Not Living Below Your Means
What does “living below your means” even mean?
Spending more than you make.
Having a house with mortgage payments that take up most of your income.
Buying that brand new Mercedes and paying car insurance.
Getting your hair and nails done every six weeks even though you have twenty dollars in your bank account.
How to break the bad money habit:
- You want to do your best to spend conservatively.
- Buy a home in a lower cost area, and avoid new builds.
- A lower cost house equals a lower mortgage, lower utilities and upkeep.
- Buy last year’s model of car or even older.
- Buy a used car.
- Don’t buy a luxury car.
4. Not Managing Your Finances
This bad habit is one of the main factors keeping you broke.
When your finances are disorganized, you do not know what money you have to spend, and that leads to overspending, which leads to debt.
Spending without a budget or not tracking your money.
Without knowing where your money goes, how will you know how much you have?
A budget is just a plan for your money, to make use of it in the best way possible.
How to break the bad money habit:
- Log your spending on paper, in your phone or in a spreadsheet, just the act of tracking your expenses brings awareness.
- Allocate a certain amount of your income to various expenses to not overspend.
- Evaluate regularly, where and how much is spent or saved and what is left in your accounts.
5. Paying Yourself Last
We are all guilty of this bad money habit. Paying ourselves last.
“I’ll save when I have an extra hundred or two.”
We never seem to have anything leftover to save.
So get into the new habit of putting some money aside into your savings before you pay your bills and live off the rest.
This does not mean go splurge or have a shopping spree with the girls.
It means break the habit of paying all your bills and necessities and then saving what’s left.
How to break the bad money habit:
- Instead of spend first, save second, switch it around, save then spend.
- Automatic transfers to your savings or investment accounts.
6. Putting Off Investing For Your Future
This habit ties in with the previous one. Not paying yourself first, or not saving first.
By waiting to invest, you are making it harder for your future self to have the retirement you deserve.
In the past year I have started trying to put more away each month into my retirement, my tax free savings, and my index fund account.
The best time to start investing is today.
How to break the bad money habit:
- Automate transfers between accounts
- Start small, $25, $50, $100 a month
- Open an investment account (I have one with Tangerine)
- Open an Retirement savings account (RRSP/401K)
- Open up a Tax Free Savings account
- Use an app like wealthsimple or other robo advisors
7. Spending Extra, Due To Poor Planning
“I forgot my metro card again, guess I’ll just take an Uber”
“Oops, missed a payment on my Visa.”
“I’m thirsty, I guess $3 dollars for a bottle of water is reasonable”
First of all, please never spend $3 on a dinky water bottle, when you can just carry a reusable, and fill it for free!
Anyway, poor planning is one of those bad money habits that will keep you broke.
Every little charge adds up, especially if you make a [bad] habit of them often.
How to break the bad money habit:
- Keep track of when bills are due.
- Make your lunch the night before, and fill your water bottle
- If you are forgetful (like me), set reminders on your phone or leave yourself a note.
- Set aside money for unexpected expenses, so they don’t catch you off guard.
8. Impulse Buying
Picture this: You are waiting in line at the checkout. It has been a long day, made even longer by this line.
You start eyeing the chocolate bars.
Next thing you know there is one on the conveyor belt.
You leave the store and have ripped open the chocolate and shoved it in your mouth before you’ve even reached your car.
You’ve just been victim to an impulse purchase.
Those little purchases can add up, especially if you go grocery shopping with a hungry boyfriend, or some children with big eyes.
Keep in mind impulse purchases are not always just a chocolate bar here or there. It can also be higher ticket items, such as that cute shirt you saw on a facebook ad, or that new drink on the menu.
How to break the bad money habit:
- Stop and think, do I really need this item?
- Do I have something similar at home?
- Learn to say no to yourself and that little devil on your shoulder.
- Sleep on it, wait a few days before making a purchase.
But girl if you need that chocolate bar, get it, just be mindful and track what you spend.
9. Emotional Spending
Do you find yourself shopping to make yourself feel better?
Stuck in isolation during a pandemic?
Amazon to the rescue!
Emotional spending is a common bad money habit that many people face.
Besides spending to feel better, many find excuses to spend money.
“It is a great deal!”
“I’m saving so much”
You are not saving money, just because something is on sale.
If it is an unplanned purchase, it does not matter how steep the discount is, you are still spending money you would not normally have.
How to break the bad money habit:
Find other ways to deal with your emotions, besides shopping.
- Get outside
- Journal your feelings
- Call a loved one
10. Spending To Impress
Keeping Up With the Joneses
(Whoever they are).
Spending to keep up with the latest trends.
Trying to keep up with friends who have expensive taste.
This bad money habit is great at keeping us broke.
We as humans want to be liked and accepted, and with that we try to fit in by buying into the trends.
How to break the bad money habit:
Stop Buying Every New Product Launched
iphone 12 anyone?
I am currently still using my iphone 6s. (Which I got two years ago)
Before this phone I had my 5s going strong for five years. I only upgraded as the phone was free, and I was getting a better value out of my plan.
Stop Being Loyal to Brands
Android vs. Iphone
Nike vs. Adidas
Or the age old
Pepsi vs. Coke
Many times we care too much about the logos we sport, over the cost we are willing to spend.
These big brands are masters at marketing, and know how to win people over.
Having a loyal following, and popular brand, companies are able to raise the cost of their products sold, and know their loyal fans will dish out the cash for the latest and greatest.
Please be loyal to your friends, family and your wallet.
Buy second hand if possible, or find a similar item off-brand.
Stop Trying to Keep up With Expensive Friends, or Trends
Most of my friends have expensive taste, and are always wearing the latest trends.
I could not keep up with them if I tried. Luckily they are very understanding and are willing to go places or do things within my budget.
One of my oldest friends had a bachelorette party in Vegas (The dream right?!)
I, being a new homeowner at the time, could not afford to go, no matter how much I wanted to.
I had to say no.
She was very understanding, and had some other girls who also couldn’t make the trip, so she had another bachelorette party on home soil, that was more budget friendly.
If they are true friends they will be respectful of your money saving goals. You may even be able to help them smash some of their bad money habits!
Stop caring what others think.
Turn down invites that you can not afford
Suggest free, or lower cost restaurants/ activities
Would you rather look rich or be rich?
In conclusion, It is ok to spend money on things you enjoy, just be mindful about your purchases.
Will it be of value to me, do I already have a similar item?
Can I find it for a better price elsewhere?
Could this money be used to better my future?
By keeping those questions in mind along with stopping your bad money habits, you will be well on your way to financial greatness.
Need a reminder:
- Using Credit Cards Mindlessly
- Being Comfortable With Debt
- Not Living Below Your Means
- Not Managing Your Finances
- Paying Yourself Last
- Putting Off Investing For Your Future
- Spending Extra, Due To Poor Planning
- Impulse Buying
- Emotional Spending
- Spending to Impress
Start breaking these 10 bad money habits that are keeping you broke, ASAP.
These may seem intimidating or dull, but your future self will thank you for taking charge of your finances.
Which bad money habits do you have? Which one are you going to attempt to break?
Let me know in the comments below.
Stay Frugal,
Connie
Related Reading: 5 Steps You Need to Take to Start Saving Money
