Are you drowning in debt? Bad money habits can make you broke, stressed, and frustrated.
We love Dave Ramsey here, some of his advice has been life-changing, and as he said “There’s a difference between being poor and being broke.” “Poor is a state of mind; broke is I’m passing through.”
We are all guilty of breaking one or two of these habits but there is room to learn and improve. You might not be aware that you aren’t using your money wisely but once you decide to change a few of these bad money habits a whole lot will change. It’s time to spend your money wisely and stop living from paycheck to paycheck.
Below are 9 common bad money habits that might be keeping you broke making you struggle to make ends meet or even making it hard to keep up with the most important things like paying your rent or mortgage.
Let’s dive into it!
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Depending on credit cards
Relying on a credit card is one of the most serious bad money habits that most people have. Using credit cards isn’t bad but if not used wisely it can leave you in huge debts. One of Dave Ramsey’s great money hack is to cut off the credit card and adopt the envelope cash systems. One missed payment will have you shelling out more and more.
Most people who rely on credit cards end up spending more than they earn which of course leads to debts. They are addictive, which means you will continue spending more money than you earn creating an even bigger vicious cycle.
A credit card should be reserved only for emergencies or if you can use it wisely. If you have been using a credit card for your basic needs like food and rent is a habit you need to stop immediately. You end up spending so much compared to using cash because with a credit card you aren’t seeing the amount of money that you are spending and using cash makes you think twice.
Unnecessary subscriptions
Do you have subscriptions that you are barely making use of? Maybe it’s that gym subscription you sign up for and haven’t stepped foot in the gym in the last two months? Cancel the subscription or memberships that you hardly use.
Companies have a great marketing strategy where they entice you to sign up for a free 1 week trial period but in most cases, you end forgetting to cancel the subscriptions. That would be a great place to start and that money can go towards your saving plan.
If you use the services that are adding value to your life then keep them. If you barely make use of them and to make things interesting you can’t even remember the password it’s time to cancel and save yourself some money.
Shiny object syndrome
This is where you buy something because you just like it. Those items you buy because you just have to have it. In most cases, compulsive spending is more emotional than logic because you can’t justify why you need to buy that item or get a certain service. We need to stop buying things because they attract the eye or because they look cool. This is a bad money habit that will have you spending money in an unjust able way. Before buying ask yourself whether it’s a need or a want.
Having no budget
Having no budget in place is one of the serious bad money habits that can eventually put you into debt. Creating a budget is the first step to financial freedom. A budget helps you to account for every dollar. You become aware of how much money goes to savings, bills, and so on.
Budgeting is not one of the most interesting things to do but it is worth it. You will be aware of those areas you need to cut back on unnecessary things which might even help you save more money at the end. The first step to breaking these bad money habits is creating and following a budget. Helps you to make sure you aren’t living beyond your means.
Some of us spend whatever we earn, which means there is no money going towards retirement or even an emergency fund. Having a budget doesn’t mean you can’t buy yourself that nice dress or go out to eat once in a while. It simply means that you have control of your money. Budgeting is simply evaluating your monthly income and coming up with a plan on how to spend your money wisely.
Once you create the budget, evaluate it and check the areas you might be overspending your income. Doing so will also help you to cut down unnecessary expenses that you didn’t even realize you had. It will also help you to identify the areas you struggle most with your budget and you will be able to work on them. It’s not the biggest expenses that drain your budget but the little expenses.
Adopt a simple budgeting system like 50/30/20 Rule. This is where 50% of your income goes toward needs, 30% of your income goes toward wants, and 20% of your income toward savings and debt repayment. Gives you a perfect guideline on how you can save more money.
Having no saving up plan
Most people are for the idea of saving what remains but that doesn’t work. You need a good plan. Saving what remains is not a saving plan that works. Referring back to the previous point, a budget will show you how much money comes in and how to spend it.
You should make it a habit to save money before you spend it. Once the money gets into your bank account, transfer it immediately to your savings account.
Saving money is not something we should take for granted. Sometimes life happens and we have those emergencies that might require us to have the money upfront. Things like job loss, a car repair, or an accident. Life is unpredictable. Without savings, this might put you in huge debt and the last thing you want is to be caught off guard financially.
Think of the financial goals you have and start working towards them. The first place to start would be saving towards an emergency fund and retirement. An emergency fund aims to save about 3 to 6 months worth of living expenses in a cash savings account.
Take advantage of saving available opportunities. For example cash back programs and coupons. Coupons aren’t for grandparents only. They will help you save money too. Those few dollars that you get to save here and there is what counts because it adds up.Don’t forget to take advantage of sales as well. That’s the best time to stock up on staple items like toiletries, pasta, toothpaste and cleaning products.
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Sign up here for free and get $10.
Download the Rakuten Browser extension and every time you visit an E-Commerce site online that is eligible for cashback you will receive a notification telling you of new deals and discounts.
If you want to make extra money from Rakuten you can sign up to be an affiliate here and you will get paid for people you refer to them. The more people you refer the more money you make. You can promote Rakuten on your blog or on social media platforms like Facebook.
When you sign up to Rakuten you will receive a $10 sign up bonus which you can transfer to your PayPal account or redeem for Walmart gift cards.
Bad money habits: Check your diet
Food is expensive. It doesn’t mean you starve yourself because you are trying to adopt good money habits but there are a few things you can do to reduce the amount of money you are spending on food.
- Meal prep
Meal prepping is fantastic because not only do you get to save money on food but you also get to eat healthily which is a win-win. Meal prepping is one of the main ways to cut your grocery bill in half. It’s a big money and time saver. It’s a money-saving hack because you will have a grocery list based on items that you need only.
Before going to the grocery store always counter check the things in your pantry to avoid buying items you already have which might end being a waste. Meal prep ensures that you already know what’s for the meals as it removes all the guesswork which means you are not stressing about cooking every time.
Want to start meal prepping but don’t know where to start? $5 meal plan is a great place to start. It’s a budget-friendly service that makes meal planning possible. It enables you to get a fresh meal plan delivered straight to your inbox. You will get cheap meal-prep recipes sent straight to your inbox every Friday for one week, curated shopping list and every meal is made to cost no more than $2/person.
For $5 a month, they will send a meal plan where every meal will cost $2 per person and sometimes even less. No need to get stressed in the evenings trying to figure out what to make for dinner now. It’s takes the guesswork out. Super easy to follow recipes and you will also get a shopping list to help you organize your grocery trip.
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Related post: 19 Healthy meal prep ideas for the week to simplify your life
- Always have a shopping list
Whenever you are doing your grocery shopping, always have a shopping list with you and stick to it. This will help you to buy only the things you need meaning there will be no wastage. Before going to the grocery store, walk into your kitchen, and create a grocery list of what you need, and make sure you stick to it. This small trick will help you stay on budget.
- Eat at home
Eating out so often is expensive. Cooking in bulk and meal prepping will make sure that you always have food ready. Minimize the number of days you eat out maybe to once or twice a week.
Late payment bills
Late payment bills always attract late fees or high interests. In most cases, late payment bills are not due to a lack of money its poor money management. Failure to plan. It’s simply procrastination.
Most of the time you miss a payment you end up paying more money. That extra money can be used for something else. Make sure you pay your bills on time to avoid the extra charges. No one loves losing their hard-earned money to interest charges and late fees. When you pay your bills late your credit score takes a hit.
Keeping up with the Joneses
Another bad money habit that can make you get into massive debt. It’s time to do away with the credit card especially if you don’t know how to use them wisely and you are always charging your purchases on them. This means you are living above your means.
Just because your friend bought the latest phone it doesn’t mean you also need an upgrade. Comparison and the desire to fit in shouldn’t make you broke and stressed. Keeping up with the Joneses will have you living above your means, drowning in debts and you won’t have any money to invest in your future.
Just do you. Focus on your goals and work towards them. If you haven’t set any goals so far, do so immediately. Goals give us direction and keep us focused and without that, you will just be mark timing in one place. You will have a clear picture of what you want to achieve. They allow you to turn dreams into reality. Set both short term and long term financial goals.
Failing to learn from previous mistakes.
We all make mistakes but failing to learn from our previous mistakes is even worse. There are so many resources such as articles, courses, and books you can take or read to better yourself money-wise. Dave Ramsey has great advice when it comes to saving money and becoming debt-free. If that’s an area in your life you want to improve on his book Total money makeover is worth checking out. Start with this 10 easy Dave Ramsey tips for saving money and improving your financial situation.
Take advantage of free money.
Who wouldn’t like to get their hands on free money? Make use of sites like Swagbucks. One of the easiest ways to make quick and easy money is through taking surveys. Surveys are super easy to complete, most take 20 to 30 minutes max. There are so many survey sites you can join but one of the most popular and high paying is Swagbucks.
The best part is that It’s free to join and you get a $5 free sign up bonus. You make money through watching videos, using mobile apps, shopping online, taking surveys, playing games, referring friends, by using the Swagbucks browser to surf the web.
Once you get enough SB points, you can redeem them into cash or Amazon gift cards, shopping vouchers, and other rewards. For instance, 500 SBs are equivalent to a $5 gift card while 2,500 SBs are equal to a $25 gift card.
Use Swagbucks Browser Extension to discover and get alerts on the latest shopping codes, swag codes, and make use of the Swagbucks browser and expect to make 10-20 SBs for every 10 to 20 searches.
More money tips to help you manage your finances well
11 Smart ways to save money on your electric bill
21 Habits of highly frugal people that will surprise you
17 Best & realistic frugal living tips for 2020 that’ll save you more money
11 Budgeting tips for beginners you can’t afford to miss on
19 Ways to save $500+ each month
How to live frugally on one income in 2020 ( 45 frugal hacks for saving money)
18 Realistic and simple ways to save money on groceries
Final thoughts: 9 bad money habits that are making you poor.
We all start from somewhere, it’s time to make a plan and follow it. Take control of your life and your finances today. 9 bad money habits that don’t have to tie you down. It’s time to break the cycle. Take one at a time and substitute with a good habit and it will be easy for you to handle your money more wisely.
If you are struggling in debt I highly recommend Dave Ramsey’s book the total money makeover. His advice has helped many achieve financial freedom and you too can do the same. Millions of people have been able to climb out of debt and have financial security and peace.
All this can be a bit overwhelming but to simplify things for you save for the future and live within your means. If you have any questions don’t hesitate to reach out.
