In times of heavy consumerism and habitual spending, millions of households have adopted some really bad money habits. Money plays a major role in the lives of most of us. So many people are living around their zero-dollar-line from week to week and from month to month. And, to be fair, there are countless more temptations than ever before, as marketing has become really sneaky.
The way out of money issues and into a financially healthy lifestyle is not so much about being cheap. I don’t want to tell you to stop enjoying your life. However, there are probably some things in your life that you’re not even aware of which keep you struggling financially. The cure to bad spending habits is being conscious about them. So, here are 29 bad habits you should break today in order to save more, have more and live stress-free.
Bad Money Habits: #1 Not Tracking Your Money
This is the one thing that enabled me to create a financially healthy life. That’s also why I put it as #1 on this list. I’ve been struggling A LOT before I’ve adopted the habit of tracking my money. And I’ve never stopped tracking since I’ve started in 2012.
You can simply do this by creating a spreadsheet that lists all your fixed monthly expenses (car insurance, rent, memberships, etc.). Break down annual payments into monthly ones so there are no bad surprises once a year. Then create different categories for expenses that vary (clothes, household items, groceries, etc.). Keep EVERY receipt from any purchase you make and add the expense to your sheet once a day (or once a week). You can then throw the receipts away.
#2 Not Creating A Healthy Budget
Listen, there are boring ways to do this, and there are exciting ways to do this. Budgeting does NOT mean to rip every piece of joy out of your life. In fact, if done right, it means to bring back joy to your life because you’re relieved from a lot of stress.
The most important rule in budgeting – in my opinion – is to pay yourself first. That means that you take 10% (or more if you can) from every dollar you earn and put it into a separate account. That’s the only way to actually KEEP the money you make. Otherwise the month will be over and you will have spend exactly as much as you’ve made (or even more).
Of all these bad money habits on this list, this one will have the power to make you wealthy – possibly even financially free, if you want that! I call this dedicated account of yours the Freedom Fund. If you can grow your Freedom Fund, then you will no longer play the game just to survive. You will play the game to win.
Learn more about the basic steps to financial freedom in the Financial Freedom Bootcamp. It’s a free email course over a few days that helps you understand the steps leading normal people like you and me to financial freedom.
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#3 Saving Without Purpose
This one might even shock you. Saving money can actually be a bad thing! Let me explain:
Let’s assume you save 10% of your earnings but don’t know what to do with it. Over time, you will accumulate a (multiple) 5-figure amount of money. Then your car breaks down and you normally would either have it repaired or get another used one. However, since you have saved these $16,000, a new car also looks tempting. And after all, it will be more secure and with better technology.
You will talk yourself into the purchase quicker than you can even say the word “NO”. And once you make that purchase, suddenly all of your good money habits have turned into very bad money habits and killed all your efforts with one stroke.
This is why saving with purpose is so important! The Freedom Fund, for example, is ONLY used for investments and building businesses. If you don’t make an investment or build a business, then leave the Freedom Fund money alone. It’s as simple as that.
#4 Spending Money On Things You Can't Afford
This one is an obvious one, yet millions of people do it anyway. They see their neighbor buy a new BMW so they feel they need one too. Everybody buys the new iPhone, and peer pressure leaves them no choice but to buy one too. Even if it’s way beyond their financial means.
If that’s you, then please please PLEASE, take a serious look in the mirror and be honest to yourself. There are healthy ways to buy all these things, but spending more than you have is NOT one of them. And it’s also not helpful to justify it with the fact that your neighbor is earning even less money than you. This only means that your neighbor has even more serious money issues than you have!
Start making more money to raise your financial level in general. Then, you can also go for more expensive things. Just NEVER for things out of reach, no matter who else buys them. You might want to compete with what other people have, but I guess financial stress is not one of them. Well, guess what! If you do everything in the same way, then you will get ALL the things others get. Not only the fancy ones, but the whole package!
Earning extra money on the side to transform this bad money habit
It’s beyond the scope of this post to go in-depth with the different ways to earn extra money on the side. However, here are a few articles that will help you get started to make money on the side. You might not even be aware of the possibilities that are out there:
#5 Wasting Money On Convenience
You might not even be aware, but companies educate us to be lazy. Why would they do that? Because they can capitalize on that laziness and our bad money habits.
Do you buy pre-sliced produce or fruit in a cup? It’s convenient, but it’s expensive A.F.
Do you even think about what a complete meal at McDonald’s costs you (other than your healthy body)? You can almost go to a restaurant for the same price. And McDonald’s will not even satisfy you which means you need to get more food a little later – resulting in even more expenses. It’s convenient, but it’s expensive.
The same goes for your coffee-to-go on the way to work. Would it be so hard to just brew your own cup at home while you’re brushing your teeth? There’s no reason other than laziness to outsource brewing your coffee. And please don’t tell me that you do it for the taste.
#6 Confusing Bad Money Habits With Lifestyle
I can’t tell how often I’ve heard people say something like “I don’t want to always watch my money. Sometimes I just want to buy something. For me, this is a piece of lifestyle and makes the right quality of life.”
Again, I’m not telling you to be cheap or live overly frugal (which I wouldn’t want to do either!). I just want to raise awareness about certain habits that might not be as obvious. And if quality of life is defined by getting yet another gadget, then I seriously recommend finding something more rewarding to do with your time! There’s so much things that bring long-term happiness. You don’t need to waste money on things you don’t need, just to feel that you enjoy a “great lifestyle”.
#7 Payday Loans
If you have paid attention so far, you understand that spending more than you have is the most destructive of all bad money habits. Well, you can even leverage that destructive force by spending EVEN MORE money that you don’t have by making use of payday loans.
Don’t ever use these loans to just satisfy a consumer urge a few days earlier than you normally could. It’s not worth the interest. And if you need to pay a holiday trip with a payday loan, well then you are SPENDING BEYOND YOUR MEANS. Don’t do that, ever! Just don’t.
#8 Consumer Debt
Consumer debt comes in many forms, and it’s another expression of spending more than you have. Marketing tries to sell you things you don’t need, and marketing does this in a very sophisticated way these days. However, this still doesn’t mean you need to listen to them (even if it might be hard).
Don’t overspend on consumerism. Don’t use your credit card to spend more than you have, just because you could. Unless you invest the money in a business or something that brings money BACK to you, it’s gone forever. And you can only pay it off by earning more or buying less in the future. So why not have it first, and then pay the price with the money you have. That way, you even save interest on credit card usage, which leads us to the next item on this list.
#9 Not Understanding The Impact Of Credit Card Debt
In case you haven’t understood how credit cards work, here’s a very easy-to-grasp explanation: You spend money which you don’t need to pay back immediately. However, this service costs you additional interest on the credit you use. The more credit you use, the more expensive it gets.
I’ve seen countless people tell me what a good idea it was to make use of the full extent of their credit card, and then just keep paying the monthly minimum balance. Well, you might think what you want, but this is very stupid advice. Depending on the interest rate of your credit card, you might end up paying THOUSANDS a year on credit card interest, just because you don’t immediately balance the card completely. See what bad money habits can cost you?
If you make use of credit cards, then balance them regularly. Otherwise, the only one who wins is the bank that gives them to you. Why else would they try to talk you into using them all the time?
#10 Paying Late Fees
When you have your budget and your money monitoring system set up, this one will probably not happen. However, you might easily forget to pay a single bill here and there, just because there’s so much going on in your life.
Thus, it’s even more important to get organized. If you know what you have to pay, and you have it on a list (where you can check it off), then you avoid paying late fees. Get organized and don’t waste money because of laziness!
#11 Overdraft Fees
Most bank accounts have a system in place that charges you a fee every time you exceed your account balance. If there’s $100 in the bank and you spend $150, then you pay the fee. Hopefully you start to see that spending more than you have is harmful on so many ends!
To solve this particular issue, you can call your bank and opt out of the possibility to exceed your account balance. This way, you won’t face any overdraft fees, and you will be prevented from spending more than you have. My personal bank account has this system in place since I’ve opened it at age 18. I’ve never changed it because there’s simply no need to spend beyond my available funds.
#12 Wasting Money On Bank Fees
Not all bank accounts have the same pricing policy. It absolutely pays to shop for the best deal. Some accounts are simply outdated because they’ve been set up years or decades ago. However, you might still pay the same amount of money, even if there are completely different deals nowadays.
Find out what alternatives there are. You can also talk to your bank and ask them to regulate your fees so you stay with them. Bank account fees can amount to anywhere from $5 to $50 per month, depending on your personal use. Of all the bad money habits on this list, this one is probably the one that can be solved the quickest.
#13 Withdrawing Cash At Random ATMs
You know that you can withdraw money for free from many cash machines. Withdrawing money from other ATMs, on the other hand, can be quite expensive. If you always pay $5 extra to get some money into your wallet, you are wasting money that could really make a difference.
This category probably falls under the umbrella of wasting money on convenience. The only reason why you wouldn’t use a matching ATM is because of laziness. It takes a few more steps to find the right ATM. Well, maybe you can even organize your trip in a way that you withdraw the money on the way to your destination. If you know how much money you have in your wallet (which you should always know), then it’s easy to plan ahead.
#14 Not Making Use Of Cashback Services
When you’re shopping online, you can make use of a great deal of cashback services. Swagbucks and Rakuten are just two worth checking out. Why not get a bit of your money back after making a purchase on Ebay or Amazon or your favorite niche-shop?
Signing up with these two services will even give you a welcome bonus and cost you nothing. This is literally free money – or wasted money if you don’t make use of it!
#15 Losing Track Of Your Subscriptions
Netflix, Spotify, CableTV, Magazines, Microsoft Office365 and so many more things we use have a subscription-based pricing model. The fees look small on a monthly basis, but they quickly add up. If you lose sight of all the subscriptions you have, you might waste a LOT of money. These services also rely on you not cancelling them because it’s not that big of a deal. Or so it seems…
Make your budget and spending sheet, and you will see where your subscriptions suck your money like flies suck blood. And just as with the flies, you might only notice it when it’s too late. Imagine the difference it would make when you uncovered only 2 useless subscriptions at $10/month each.
#16 Enrolling In An Over-Sized Gym Membership
Good resolutions are powerful when you start something impactful like working out regularly. However, this enthusiasm often leads to emotional rather than rational thinking. You probably don’t need the all-in-one package where you can participate in every course, get all the shakes for free and use the sauna.
Please check if you make use of all the things included in your membership plan. If not, then it’s time to downgrade your plan to meet your true needs. Especially gym memberships can cost a lot. If you’re going for becoming healthier, then also take into consideration to get healthier financially!
#17 Wasting Money On Utilities
Here we go again. Of course, it’s easier and more convenient to just leave the light on while you take a short ride to the local store to get some food. But it’s nothing more than a waste on electricity. According to research, lighting makes about 20% of the annual electricity bill. The same rule can be applied to water. These bad money habits not only hurt your wallet, but also the environment. You can help fix both by just acting more conscious when it comes to utilities.
On another note, leaving the TV on all day only to have it on is just as wasteful (and annoying). Whenever I come into a household where the TV is on while I try to have a conversation with people, it’s annoying beyond measure to me. You might actually be used to it and not even notice it anymore. But why have it on, then, in the first place? Turn on your TV when you watch TV, and turn it off when you don’t. Paying roughly $150 a year extra in electricity for this bad money habit should be enough motivation…
#18 Not Planning Your Meals
This one might seem odd if you’re not used to planning out your meals for the week. I’ve never done it, and I’ve given it a try recently, basically to be quicker at grocery shopping.
Believe me or not, but not only has changing this habit minimized the amount of money I spend on groceries significantly. It also reduces the daily thinking of what I should do with what’s in my fridge.
Every Sunday, I take 10 minutes to plan out the meals for the week (if you’ve done it a few times, it gets easier as things repeat). Then I go through every meal and write down the ingredients I need to cook it. I also think about household items like toilet paper, sponges and the likes. Finally, when I’m at the store, I only buy what’s on my list knowing it will be everything I need for the upcoming week.
#19 Habitually Eating Out
Eating out can be a lot of fun and a way to socialize with friends, family and strangers. However, it absolutely belongs on this list of bad money habits because it can become VERY expensive if you lose track of it. You’re probably well-aware that cooking at home is a lot cheaper than eating out.
To fix this or get a handle on it, tracking your expenses (money habit #1) helps a lot. When you keep track of your expenses and budget your money, you know exactly how much you have left for going out. Don’t tell me this would put stress on you because it would spoil the fun of eating out. Well, it should – a little! Being wasteful with your money is what puts stress on you! Changing a habit into a healthier version is only a little uncomfortable for a while. Then, life gets better.
#20 Maintaining A Meat-Heavy Diet
I’m not telling you to become a vegetarian or something. Just be aware that meat is usually the most expensive part of your diet. Consequently, when your diet relies heavily on meat for no specific reason other then you being used to it, changing this might actually help you a lot to better your personal finances.
#21 Only Buying The Top Brands
In days of globalization, there are different versions of the same product available. Oftentimes, the only difference is the look and the name on the label. Did you know the same company builds the Microsoft XBox and some specific model of a canon camera? That’s right. Brands and labels don’t indicate what’s inside the package.
I’m telling you this so you can understand that the same is true for groceries and other items too! Top brands even build side-brands nowadays that offer cheaper products which are made in just the same way as the top ones. Only the label says something else. Nevertheless, it’s the same product. Don’t be fooled by labels and brands. Go for the equal-quality alternative of the no-name product.
#22 Wasting Money On Impulsive Consumerism
Buying new things is supposed to make you happy. Marketing promises us shots of dopamine if we buy their newest release. However, drowning a bad mood in a shopping frenzy will only cause a much worse mood later. Don’t be so easy to catch. Fight the battle so that marketers see a real opponent in you. Don’t let them make use of your bad money habits without any resistance!
A good thought to keep in mind regarding this particular bad money habit is this: Ask yourself if what you’re about to buy is going to make you happy (I mean, not only for an hour or a day) or has a real use in your life – like buying a high-end camera to start your photography business. If the answer is no, then you better keep the money and be proud of your decision!
#23 Not Comparing Prices Online
The development of online shopping possibilities is killing small retail stores. At the same time, it’s a huge improvement for us consumers because we can compare prices at a glance. And I think we absolutely should. Online stores can always offer better prices than local stores because they don’t need to pay for giant, well-designed stores or people who operate it.
On the other hand, I DON’T recommend going to a retail store and asking for an extensive consultation, and then leaving and buying the product online. That’s just respectless and devaluing behaviour. If you make use of a service, then you should also reciprocate. If it’s not worth the additional expense to you, then don’t make use of the service. You wouldn’t want to be treated like this either, would you?
#24 Ignoring Traffic And Parking Signs
Talking to people about traffic signs can be a real pain. Of course, everybody is complaining because there are so many regulations on our streets. Some of them may or may not make sense at all. However, this doesn’t give you the right to ignore them. It’s like playing a game. There simply are rules that participants need to follow, or they cannot play the game.
As a result of ignoring some of the traffic assignments, people get expensive tickets. Sometimes it’s just by accident, but sometimes it’s intentional ignorance. And in that case, you’re just wasting money in a way that resembles throwing it out of the window straight into a river. Don’t give away the rewards for your hard work in such a completely useless way.
#25 Not Checking For The Best Phone Contract
Especially in the US, telecommunication has a huge price tag to it. Comparable services cost less than half in most countries all over Europe, for example. This means there’s real use in comparing contracts and finding the best deal. If you can cut your phone and Internet cost by just a bit, it might already make a huge difference.
You can find special offers for new customers. Usually, all companies offer them. Why not make use of this and change your provider? You can transfer your phone number for a small fee, but over the course of your contract, you might save significantly. Maybe you could even make a deal with your current provider when you tell him you’re about to go with the competition. He might be willing to offer you the discounted contract for new customers, just to keep you on board.
#26 Buying Last-Minute Holiday Gifts
You probably know it. There’s Christmas again (wait, hasn’t there been Christmas just a month ago?!? Why again so quickly?)…
Christmas and other holidays draw people into shopping mode like nothing else. Of course, retailers know that. And they react to it by adjusting prices upwards. Be smart about it and think of holidays a month or 3 weeks in advance. If you get your gifts then, you can save a pretty amount of money that pays your electricity bill for the next month or three.
Bad money habits always lead to overspending in a way that’s not necessary. Therefore, buying last-minute holiday gifts certainly belongs on this list and on your radar!
#27 Falling For The Newest-Gadget-Syndrome
If not way earlier, than at least since the annual release of the new iPhone or Samsung Galaxy do people fall for this phenomenon. Somehow, just because a company releases a new product that has a slightly better camera and a new display, people die to get it on day 1. This is a dream – if you’re the company. It’s one of the worst money habits on this list, if you’re the consumer, motivated by peer pressure.
Think about what you could do with the hundreds of dollars you’re willing to spend on the iPhone X, even when you have a perfectly working iPhone 8. Personally, I’d rather start one or two new businesses with the money and get the iPhone a few months later from the revenue these businesses create for me. And if you don’t know how to do that but would like to know it, then leave me a comment and let me know what your struggles are. I’m happy to help!
#28 Boredom-Induced Shopping
Some people open the fridge and get a snack when they are bored. Others go shopping. This is not the kind of shopping that solves problems, though. Just as grocery-shopping with an empty belly is a bad idea, shopping because of boredom is, too!
Getting rid of boredom can be done in a lot more rewarding ways that actually put money IN your pocket instead of sucking it out. Again, building a small business on the side is a great way to do that. And you can build a business around nearly everything that’s actually interesting to you.
#29 Wasting Money On In-Game Purchases
Video games are monetizing their businesses in every way they can possibly think of. Whether you’re playing on your phone, Playstation or computer, the newest games always offer extensions or rewards in exchange for additional money.
The issue here is that you don’t even get something in exchange that you can use in your life. You buy items that improve your video game. Quests can be solved quicker because of your exclusive rifle. You can dress your avatar in special clothes so that other players watch you in silent admiration.
None of these things, however, do ANY good to your real life. For me, that’s the sad part about it. Over time, this money could easily fund a trip to a foreign country or a vacation with friends or the down-payment of your first rental property. But instead, it’s wasted on virtual furniture for your in-game refuge.
Bad Money Habits - Final Words
Everyone of us has adopted one or many of the above-mentioned bad money habits. With this article, I just want to raise awareness about these habits so you can now choose consciously if you want to keep wasting money on them or if you want to change them.
If you’re ready for a complete make-over and want to flip your financial life 180°, you should check out the Freedom Fund Framework. It’s a program that costs $39 and teaches you how to save $1,000 in 90 days. I think that’s a great deal, given that without guidance, in 90 days you might just be in the same spot you’re in today. I know that I need guidance all the time if I want to move forward.
Breaking bad money habits can be hard. So, I invite you to check out the course and get on board if you think it’s just what you need at this point in your life!
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