Not having enough money to make it to the end of the month is one of the worst feelings I’ve ever experienced. Recently, I wrote a blog post about what you should do when you’re struggling to pay your bills and it made me think a lot about the kinds of habits that cause people to end up in that position in the first place.
Personally, my worst money habit when I was a bit younger was using credit to pay for just about everything and spending all of my cash on drinking with my friends. Not the best way to throw away money you worked really hard for, and I racked up a ton of credit card debt in the process. Silly me.
My mission on Not Quite an Adult is to educate people on ways they can improve their finances and live their absolute best life and staying broke isn’t going to help you do either. So let’s dig into my list of bad money habits that are keeping you broke!
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Bad Money Habits That Are Keeping You Broke
1 // You Think of Credit As Available Money
This is probably the biggest bad money habit that we need to eliminate, and I’ve been guilty of having this mindset from time to time. Have you ever thought about something you wanted but didn’t have enough money in your bank account for it and thought, oh, well… I have enough available credit on my credit card to pay for it so I’ll just throw it on there ?
If you don’t have enough money in your bank account to pay for something, then you simply cannot afford it. If it is not food or shelter, you don’t need it that badly and you can probably survive without it.
Credit cards are merely a tool that we have at our disposal that we can use to help us meet financial goals. You should never view credit limits as money that you have to spend because you’ll end up in immense amounts of credit card debt that you’ll have a hard time digging yourself out of.
2 // Not Being Ready for Emergencies
Emergency planning is a huge part of personal finance, without emergency money you aren’t covered when life’s unexpected adventures happen. No matter what the situation, I’ll always recommend that you start an Emergency Fund.
When you have emergency money handy you don’t have to use credit cards for every minor inconvenience. Imagine you have $20 in your bank account, no emergency fund, and you blow a tire in your car. What do you do? I’m assuming you would throw that repair on a credit card and take a few months to pay it off.
Now let’s imagine a happier situation. You’ve been saving up your emergency fund (3-6 months of expenses) for a year now and your tire blows. You’ve got $2,000 saved up already and you completely cover the cost of the repair without interest and without stress. Sounds good, right?
3 // Making Late Payments
Making late payments is a huge negative for your finances in way too many ways. Not only is it a never ending cycle that you may never get out of, but you’re also throwing away money on late fees and hurting your credit score.
You should always strive to at least make the minimum payment on all debt that you have even if you can’t afford to pay one penny more.
A few months ago I missed my first ever credit card payment. Not because I couldn’t afford it, but because I was stressed and completely forgot that I hadn’t paid it yet. I ended up paying $20 in late fees and my credit score dropped 35 points from ONE missed payment.
If you continue to miss payments or pay late for a long time you’re going to completely destroy your credit and waste a lot of money in the process.
4 // Never Saving
It doesn’t matter how old you are, saving money is always a good idea. Unfortunately, most people don’t even think about saving money until they’re at least 30 because they’re too focused on Keeping Up With The Joneses and having a lot of booze.
If you want to break any of these bad money habits, you need to start trying to save money as soon as possible.
You can start with everyday ways to save money that are simple and don’t result in you needing to think too much. You can even check out these ways to trick yourself into saving money that work like a charm.
Just making small changes to your everyday routines can change your entire life and get you a pretty significant nest egg in your bank account.
- Related: Beginner’s Guide to Saving Money
5 // Never Talking About Money
Have you noticed how darn taboo talking about money is? Why is that? It seems like we just aren’t allowed to talk about any of the topics that are actually important.
If you go through life never talking about money, you end up keeping all of those feelings down and that is just stress and anxiety inducing. If you don’t talk to people about money, they won’t know when you’re struggling.
Imagine if you have $5 in your bank account and your friends think you’re rolling in dough and they ask you to dinner. If you never talk to them about money they won’t know why you’re cancelling and you’ll have to come up with some excuse and lie to your friends.
Talking about money is extremely important in romantic relationships as well, obviously even more important than with your friends and family. You should read these 4 important money conversations you must have with your S/O!
6 // Making Impulse Purchases
Oh, impulse buying, it’s so satisfying in the moment but so detrimental to our finances in the long run!
Let’s imagine this situation, you go to the same grocery store once a week for 10 years and you buy a $2 chocolate bar as an impulse decision while you wait to check out. Over that 10 year period you spend over $1,000 on chocolate bars in the grocery store checkout line.
Imagine all the amazing things you could’ve done with that $1,000!
A good rule of thumb is to wait at least 48 hours before making any purchases that weren’t planned for. So, next time you’re at the mall for something you actually need and you see a sweater that you think you just can’t live without, leave.
One of two things will happen. Either you’ll completely forget that sweater ever existed or you’ll only think about the sweater for the next two days and that is how you’ll know it’ll be worth it.
7 // Ignoring Your Debt
Fun Fact: Debt will never leave you. Especially your student loan debt, that shit doesn’t even go away if you go bankrupt!
A lot of people use avoidance as a coping mechanism for big issues like their soul crushing debt. I know people who have automatic payments set up to pay just the minimums on their student loans so they never actually have to think about them.
What’s the problem with that? Well, at their current rate of payment it’s going to take 10 years to pay off their student loans and that’s with paying $200 a month. Imagine all the awesome things you could do with $200 a month over 10 years. That’s a lot of money.
You should try your absolute best to work hard on paying off your debts as soon as humanly possible. For you this could mean a few months, for some people it could mean a few years. Debt isn’t fun, so don’t ignore it.
8 // Keeping Up With The Joneses
This one is a really hard habit to break, especially now with Instagram. It’s so insanely hard to not compare ourselves to others and to want everything that our friends and family members have.
The most important mindset shift you must make in order to do better with your money is to just be content with what you have.
You don’t need to get a brand new car just because your coworker got one. You don’t need a new, bigger flatscreen because your friends are coming to watch a football game. You definitely don’t need to spend money on designer clothes that you’re eventually going to get sick of and donate.
Keeping up with the joneses is something that you must break before you leave your 20s, and if you’re still chasing someone else’s life when you’re in your 30s, you’ve got some serious work to do.
9 // Staying Behind on Your Bills
Living paycheck to paycheck is a really stressful situation so really the ultimate goal is to get at least one month ahead on bills. When you’re only paying your bills for the month you’re currently in, you go through a lot of stress because there’s always a chance that you won’t be able to cover them!
Recently, we wrote a post about what you should do if you’re struggling to pay your bills and these are some of the first steps you should take to start working towards being at least one month ahead.
10 // Not Having a Budget
You know what’s crazy to me? I read a stat on some blog that said 1 in 3 homes don’t have a budget. That’s BONKERS. We have a debt and poverty crisis and I think that budgeting could be the answer to a ton of these problems.
When you budget, you have a better idea where your money goes (duh) which means you spend less of it and you use more of it as a tool. If you’re not sure where to start when it comes to budgeting, you can sign up for our newsletter and get our 5 Days To A Beautiful Budget Email Course FREE, signup below!