Top 10 Bad Money Habits That Are Keeping You Broke

We all make bad decisions when it comes to managing our finances. But bad money habits can keep us from achieving financial independence, especially when we’re not aware of them or when we don’t know how to change those habits. Below is a list of bad money habits that are keeping you broke :

1. Not Having a Budget.

It’s easy to lose track of your money and to spend too much on the least important things when you’re not having a budget. Having a budget and prioritizing your spendings can save you unnecessary debt. You can even use apps like Mint to keep a budget.

2. Making Minimum Payments On Credit Cards.

There’s no habit worse than borrowing money with a double-digit interest rate. To make matters even worse, making minimum payments on credit cards can make you pay double what you borrowed because of the interest charged. If your balance is $1,000 with an interest rate of 10% and you make a minimum payment of 20% per month, you’re going to end up paying $300 in interest alone. If you can’t quit using a credit card, make sure you pay off your balance every month.

3. Seeking Happiness In Material Things.

We seem to believe that happiness is in the next item we purchase. That the purpose of saving money is to actually buy the next expensive thing. The truth is, once you have the basic needs for a comfortable life, nothing you can buy can add much if anything at all to your happiness level.

4. Shopping Therapy and Impulse Buying.

Often times, we end up regretting the decisions we’ve made when we’re sad, and it’s no different when it comes to shopping therapy and impulse buying. You might feel a little bit better after buying something, but that feeling is momentarily and it’ll soon fade away, only to be replaced by guilt and regret. So, when you’re feeling the blues try something more constructive.

Related: 15 Small Ways to Be Happier This Year

5. Eating Out Too Often.

Breaking this bad money habit can literally save you thousands of dollars every year, especially when you have a family to feed.

Eating out might seem like the right thing to do, especially on those days when you’re too tired to put something together or when you don’t have much time. It’s fine, only we’re almost always drained of energy and running out of time when we’re home back from work.

With some help and some smart planning, you can manage to put together something healthy to eat. Try cooking in larger quantities and freezing the rest for later and get yourself some help from your family.

6. Spending More Than You Earn.

Lots of people think that if they’re spending more than they’re earning, than their income is not enough. The truth is, people who don’t know how to live below their means, tend to upgrade their lives with any rise in their income, which makes the latter never enough for them. Downsize your house, downgrade your car, and embrace minimalism, you’ll be amazed at how far your income can go once you learn how to live below your means. The rule goes like this « If you can’t afford it twice, don’t buy it ».

7. Paying Unnecessary Fees.

Fees like ATM fees and membership fees that you don’t use might seem almost insignificant, but those fees add up in no time. 

8. Not Saving For an Emergency.

Keeping some money aside every month as an emergency fund can save unnecessary debt for example, for a medical bill or fixing something in the house or even fixing your car after an accident. No one should be anticipating these things, but they might happen.

9. Not Learning How to Manage Your Finances.

Learning is the best investment anyone can make. It saves lots of work and effort and helps guide you to new ways to manage your money better. Whether you want to improve your career or you want to acquire better money management skills, reading books in that field and attending workshops can help you do that and more.

Related: 12 Must-Read Success Books to Get More From Life

10. Relying On One Income Stream.

Focusing on your career and improving it, is great. But you might also consider starting a side hustle or investing in stocks and real estate or even getting a second job if you have the energy and time for that. Having more than one income stream is a great way to feel more secure financially and be able to push yourself toward financial independence and wealth.

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