Bad Money Habits And How To break Them For good

How to break bad money habits
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Old habits die hard. And bad money habits are no exception.

They are frustrating, annoying, and depressing.

Who doesn’t have money regrets? Give me a shout. Probably nobody.

What Is A Money Habit?

A money habit involves everything (e.g., saving, spending, and investing) that you do with money on a daily basis without having to think about it.

Our daily money habits dictate every money decision we make.

There are good and bad money habits.

Good money habits (like stashing extra cash in savings) are essential to get your finances in order.

In contrast, bad financial habits that rob you blind (like paying for services that you barely use) are roadblocks to financial freedom.

Luckily, there are practical ways to break these bad money habits.

Today you will learn 9 bad money habits and tips on how to take control of your hard-earned money in this post.

Need to beat your bad money habits?

9 Bad Money Habits You Need To Break

#1 Not Paying Bills On Time

Did you forget the due dates of your regular bills and credit card payments?

Whatever the reason is, you are leaving a serious dent in your bank account.

If you are constantly paying late, not onlywill you pay more than you should (such as credit card interest), but it will damage your credit score, which could affect future purchases (such as buying a house).

STOP doing that.

If it’s easy for you to forget the important dates, set an alarm alert for each due date on your mobile.

Some credit card banks also have email and app alerts; make sure to turn them on.

Or set automatic deductions to relieve the stress about the dates. But do review the bills to make sure you are not being overcharged.

A little bit of initial planning would save you a lot of money down the road.

Also read:

#2 Using Plastic Cards And Not Paying Back In Full

We all like the convenience that plastic cards bring. But when you smash out your credit card, you dig a hole in your monetary pocket.

It’s so easy to rack up a lot of consumer debt.

The Experian’s latest State of Credit report shows that U.S consumers’ average credit card balance is $5,525. And it takes years to pay that off if only paying the minimum amount due each month.

Is there an easy fix to change this bad money habit? Try these tips below.

If you have to use credit cards, try the ones that offer rewards while shopping.

And only use credit cards for big or online purchases. As for daily essentials like coffee or gas runs, carry cash.

Instead of paying the minimum, pay your balances in full to avoid additional interest charges and debt.

What if you can’t pay back in full?

Here are the things you can do.

Freeze/get rid of your credit card, delete your payment information online, deactivate the browser’s autofill feature, and unsubscribe from the newsletters.

Pause for the cause.

Alternatively, you can use physical dollar notes for everyday purchases to drastically reduce your credit card balances.

Can’t get rid of credit cards in this modern world? I get you.

Maybe think twice or three times before swiping your savings away. Imagine how many extra working hours you have to do to trade your wants. Are they really worth the sweat?

Or, set your credit card daily/monthly spending limit so that you won’t live beyond your means.

#3 Making Impulse Purchases

This is one of the most common bad money spending habits.

Let’s have a look at the bad money spending habit examples.

Do you have the habit of spending until you have zero in your accounts?

Have you purchased lots of nice-to-haves on sale?

Are you tempted to buy more when you feel sad, bored, or lonely (emotional spending)?

Impulse spending (bad money management) doesn’t just involve bigspending; smallexpenses also count.

Do you usually have unplanned trips to the nearest ATM (not even your bank) when you desperately need cash and end up paying more? What’s worse, you withdraw cash with your credit card.

Or, do you often buy takeaway coffee or bottled water for the sake of convenience?

$2.5 for the procedure fee here and $5.5 for a takeaway coffee there won’t wreck your finances immediately. However, small bills can add up quickly, so do expensive shopping sprees.

How To Have Good Spending Habits

Keep an eye on the poor spending habits and observe closely to determine the possible causes (we will talk about this in detail later).

Understanding the leading causes of your shopping behavior would help you curb overspending on unnecessary items and break the vicious chain.

And do your bank balances a favor, start a bit of financial planning (not buying for convenience) to avoid blowing your money.

For example, if you just cancel your premium cable service that you rarely use or start cooking at home with a lovely meal plan, you can see immediate positive money results in your bank account.

That said, there is nothing wrong with treating yourself once in a while as long as the spending is within your budget.

Also read: Lifestyle Creep: How To Avoid It And Protect Your Hard-Earned Money

#4 Not Having Visions For Your Financial Future (Or Never)

What do you want out of your financial life?

No matter how big (buy a house) or small your money goal is (save $1,000 for this Christmas), you need to have at least one.

Having financial goals could help you focus on what’s important to you, motivate you to achieve your goals, and get over financial anxiety.

How To Fix This Money Habit

  • Write down your specific financial goals and set a time frame. If you are unsure, think about your needs and wants in the long term.
  • Find ways to achieve your goals. Whether it’s saving for a vacation you are dying for or making more money for future investment, just do it.
  • Monitor your progress, review your goals regularly and make adjustments if needed. 

Further reading:

#5 Not Creating A Simple Budget

Don’t know how much money comes in and out of your bank?

You are cooking yourself a recipe for financial disaster.

No kidding!

If you want to take control of your money and meet all your financial goals, you need a budget that works for you.

Also read:

What Is The 50/30/20 Budget Rule & How Can You Use It To Your Advantage?

Which Payment Type Is Best If You’re Trying To Stick To A Budget?

You will know your income, expenses, savings (if any) and identify negative spending patterns with the help of a budget.

Then you can

  • find out the major challenges connected with these bad money habits,
  • prioritize your expenses,
  • cut down on nonessential items,
  • develop better spending habits,
  • speed up the habit formation process,
  • and still enjoy life without hurting your overall budget.

Make better financial decisions today and break the bad financial habits by making a personal budget.

Note that making a budget doesn’t require you to be an expert in spreadsheets or math.

There are many simple solutions to help you set up a budget, and you are welcome to grab my budget planner template to get you started.

Related Articles About Budgeting:

How To Travel The World On A Budget In Your 20s

How To Throw An Affordable Wedding

How To Create A Christmas Budget In A Few Easy Steps

#6 Putting Off Saving

When it comes to financial freedom, saving money takes up a big part.

Maybe you know you need to save money for emergencies and retirement for your future self, but you just don’t take action.

Many people fail to save because they spend before saving once they receive their regular paychecks.

But in reality, after spending, nothing/little is left in your bank account by the end of the month. How could you save when your bank account is empty?

Living in the present but saving for the future is one of the best money habits that you should develop.

The extra savings could provide you with more financial security and flexibility. So you don’t have to borrow from friends, take loans, or rely on your children and the government when in need of money.

How do I break this bad money habit to increase savings?

Ever heard of paying yourself first?

When you have a steady/irregular income, pay yourself first. Save a great portion of your paycheck before spending your money.

Automatic deductions will make your life easier if you find it challenging to save, especially with multiple savings accounts. By doing this, you can save every month without having to think about it.

💡 Pro Tip: Don’t forget to get a free sign-up bonus and a high-interest savings account. Never dip into your savings accounts for no good reason.

Recommended reading:

#7 Not Saving For A Rainy Day (Or Never)

An emergency fund is like a buffer for all unexpected expenses.

A recent Emergency Savings Survey from Bankrate shows that more than half of Americans have less than three months’ worth of emergency savings. And 25% of Americans indicate that they have no emergency fund (source).

I can’t stress this enough. No matter how much you don’t like the idea of life incidents, it happens when you least expect it.

No ifs, no buts, no maybes.

A minor incident like broken tires or a big one like unexpected job loss could easily break the bank and put you into credit card debt (high interest).

On top of that, these surprise costs could drag you behind on your regular bills (like your monthly rent and utility bills).

It’s said you should save for at least three to six months’ worth of living expenses in your emergency fund to feel financially secure.

Say if your overall monthly living expenses are $2,000, you need to save $6,000 to $12,000.

That said, there is no one-size-for-all formula. 

To form a habit of saving for your emergency fund, you can start with as little as $50

Also read: Cool Piggy Banks: Fun Ways To Save For An Emergency Fund

#8 Ignoring Your Personal Finances Completely

Having a financial mess is frustrating enough, but ignoring it only makes it worse.

Unlike some problems in life, money problems don’t disappear like magic after a certain amount of time.

We all have financial obligations. No matter what status you are in, it’s essential to form the habit of checking your money problems and learn how to manage your money effectively.

Constantly monitor your balances and make adjustments to improve your financial situation.

#9 Not Making Your Money Work For You

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“If you don’t find a way to make money while you sleep, you will work until you die.” – Warren Buffett

Unless you are super lucky to receive an inheritance from your grandma or win the lottery, only depending on your savings won’t guarantee financial comfort for your golden years.

If you want to grow your money passively, you need to improve financial literacy and learn how to make your money work for you. 


You can always start with free online resources and seek professional help if needed.

Knowledge is power when you know how to use it in the right place. 

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Bottom line: Never stop empowering yourself with money knowledge. 

Why Do I Have Bad Spending Habits?

Bad spending habits could be formed consciously or developed subconsciously over time. 

There could be many reasons behind poor financial habits.

Here are some common causes.

Family Background

How you were brought up could greatly affect how you spend money. 

For example, people are less likely to save when the family has always been broke or lives paycheck to paycheck.

Or, you would like to compensate for what you don’t have in your childhood by buying more things than you need. 


Does the society you live in encourage shopping, buying, and paying?

Multi-billion merchants have made the buying process easier and faster than ever. 

In some retail stores, you can even buy things using facial recognition. That means no swipe, click, phone, and cash are needed. 

Or, you can choose to buy now, pay later. No deposit, no credit check.

It is hard to abandon these spending habits when shop owners make paying super easy. 


Thanks to the widespread use of social media, you can get informed with your friends’ status and any new products within a click.

Technology makes it easy to compare with others (friends, colleagues, or even strangers).

For instance, If you have the latest iPhone, I need one to catch up with you. Otherwise, I look/feel bad.

Take some time to find out how your bad money habits are formed and then overcome them one by one.

Break Bad Money Habits For good

Acknowledging your bad money habits is the first step to financial success.

Ever heard of this saying? Expecting things to change without putting in any effort is like waiting for a ship at the airport.

If you determine to break these bad money habits and work toward financial freedom, you need to take positive action in life.

You don’t need to make drastic changes to develop good money habits. You can start by eliminating one or two bad habits mentioned in the post.

Too much, too soon will just drive you away from developing all the positive money habits.

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Remember: Baby steps count. Small changes in your daily routine can foster massive improvements in your monthly financial situation.

Whatgood money habits do you have? Let me know in the comments.

Liked this post? Share it with your friends. Your share might help your friends break bad money habits for good. Don’t forget to follow Create Earn Live on Pinterest for the latest personal finance tips. 

Effective ways to break your bad money habits

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