Money Habits Introduction

Money habits play a significant role in shaping our financial well-being. Whether consciously or unconsciously, our daily actions can either propel us toward financial success or hinder our progress. Breaking bad money habits is essential to building a secure financial future. In this post, we will explore 20 everyday money habits to break and possibly achieve long-term financial success.


1. Impulse Spending

One of the most damaging money habits is spending money impulsively. Purchasing items spontaneously without considering the financial impact can lead to unnecessary stress and avoidable debt. Impulsive spending is a prevalent consumer behavior with negative effects on the spender. While it may contribute to increased sales for businesses, it can also lead to financial challenges and emotional distress for consumers. There is a reason those who spend impulsively spend. Understanding that reason is the first step to preventing it.

By understanding the triggers and effects of impulse spending, individuals can make better purchasing decisions and maintaining control over their finances.

Impulse Spending
Most of us know how hard it is not to spend impulsively. There is a way to lessen the impulse to buy. By following the two-day rule. Here is the gist of the rule: If you want to buy something, wait two days. Walk away, tell yourself, In two days, if I feel the same and the item is still there, I will buy it. Chances are logic and the moment of want will be gone even before the next day. If by day two, you still want to spend, and you can logically tell yourself why you want the item, then buy it. Don’t use logic the moment you see the item. This will not work. The key is walking away and waiting.

2. Spending Beyond Your Means

Spending beyond the money you make weekly or monthly is a common money habit many of us face. These days it’s easy to spend more than you make. Sometimes, it’s more about conveniences that anything else. It’s convenient to buy that latte each morning, it’s convenient to pick up dinner on the way home. It’s even convenient to work in a job that costs too much to get to each day.

The reality is spending money outside of a budget leads to accumulating debt. A situation that makes it difficult to achieve any financial success. Spending beyond one’s means can have severe consequences. Repercussions such as financial instability and stress are common outcome. When we choose to spend consciously and adapt responsible financial habits. It’s easier to avoid falling into the trap of overextending ourselves by spending beyond our needs. Cultivating financial discipline and living within one’s means are crucial steps toward achieving long-term financial security and peace of mind.

Bonus Tip

One of the best way to prevent spending more money than we make is to follow a budget. In the past, such a process would involve pen, paper and a balance book. Today, using the right app or software, and linking it to your bank, can take less time that we realize. The longest part of the process is entering items you only pay cash for. Here is a link to the best apps to use today to track your finances.

3. Ignoring your Budget

This next bad money habit directly results from the one above. Imagine having a budget, yet ignoring it? It’s not as uncommon as most may think. Think about habit one above. You are in your favorite department store staring at a pair of shoes you feel you must have. What happens if you ignore your budget and buy those shoes impulsively?

The bottom line is ignoring a budget can have severe consequences for an individual’s financial well-being. Budgeting is a fundamental tool for managing money wisely, and to avoid overspending. When we embrace this tool and exercise financial discipline, it’s a step towards taking control of our finances. In addition, this tool can help to reduce financial stress and build a more secure financial future. Failing to create and adhering to a budget is a recipe for financial disaster.

Bonus Tip

Use a monthly reward system to help stick with a budget. Each month, if you stick with a budget from the beginning to the end of the month, give yourself a gift. The best part is you can add the cost of the gift to your monthly budget. This is also a great way to work on impulse spending.


4. Neglecting Emergency Fund

It’s easy to imagine why you would want to have extra money available for emergencies. If you drive, think about the headache of finding money to replace a mishap on your car. What about family? Have any you are close to that doesn’t live in the same state you? What if something happens and you need to hop on a plane? There are many scenarios to consider where an emergency fund would be valuable. Now, I know many will say that’s what credit cards are for. But wouldn’t it be a wiser choice to not have an additional expense the following month? Being without an emergency fund can leave you vulnerable to unexpected expenses or emergencies. Set aside a small portion of your income regularly for such instances. A financial safety net isn’t a hindrance, but a smart choice, and it’s a money habit worth implementing.

Many debit cards have a feature that will roundup what you spend and put the difference into a separate account. Creating an emergency fund could be that simple and painless. Another painless way is to have a small portion taken from your paycheck each time you are paid. Just remember not to request a debit card for this account. It should be a physical withdrawal. Having a debit card will only temp you to use the fund for not quite an emergency.

5. Relying on Credit Cards

Credit cards offer undeniable benefits when used responsibly. They provide convenience, help build credit history, and offer rewards. However, relying on credit cards without careful budgeting and discipline can lead to debt accumulation and financial strain. There is a method for responsible credit card usage. It involves not spending more than you can afford to pay, and understanding fees and rewards. In addition, it’s also about using credit wisely, and sometimes paying off the balance monthly. The best use of credit cards focuses on using them wisely for convenience, while maintaining a low balance. It’s not advisable to use them as a source of funding.

Become familiar with the term low utilization ratio. It is the percentage of credit currently in use. A high utilization ratio can affect your credit score. Keeping it low while maintaining a reasonable balance or paying off your balance can increase or stabilize your credit score. This is a money habit that delivers results for your effort.

6. Not Investing for the Future

These days, it’s understandable why thinking about your financial future isn’t a priority. However, neglecting to invest in the future can hamper your ability to grow wealth and meet long-term financial goals. Harnessing the power of compound interest now is a benefit you will reap in the future.

Investing doesn’t have to be a hardship. It could be as simple as signing up for your company’s 401K benefit, or accumulating funds in a savings account to transfer to a high yield savings account or a money market fund.

Make sure you are financially stable before tackling investments beyond a 401k. Also, take the time to learn more about any steps you plan to take to invest your hard-earned dollars that delivers result for your effort.

7. Falling for Sales and Discounts

While sales and discounts can be tempting, they can also lead to overspending. Evaluate purchases based on value and necessity, not just discount prices. Sales and discounts can be a beneficial way to save money while purchasing desired items at a lower cost. However, consumers must exercise caution to avoid falling into the trap of impulse buying or overspending. Make informed choices when setting a budget, and prioritizing genuine need. Make the most out of sales and discounts without jeopardizing your financial well-being.

Coupons are a great way to save money. But in order to allow them to help you save money, you need a strategy. Here are two to try: 1. Only use a coupon if it’s on something you already use often or need to replace, not to add new items. Or, 2. Use a coupon or discount if you want to switch brand and are not sure if you would like the new brand that’s on sale.

Using any of the above strategy will be hard, because who doesn’t want to take advantage of buying another pair of jeans that’s deeply discounted? But you have to ask yourself, do you need that pair of jeans?

8. Eating Out Excessively

According to the website, the average cost of an eat-out meal is $13. The average cost of a meal prepared at home is $4. Also view it this way, a restaurant meal is about 325% more expensive than a $4 meal made at home.

Frequent dining out or ordering takeout can drain your finances. Cooking at home not only saves money, it also promotes healthier eating habits. Eating out is not only financially draining, it can have a negative impact on your overall health. Consider this: When you prepare your own meal, you control what’s used to prepare it. In a restaurant, you don’t have that kind of control. 

Instead of using a credit card to pay for the meal, consider using cash. Reaching for cash is a great money habit that will probably prevent you from ordering excessively. This will also help you think twice about what you order.

9. Paying for Unused Subscriptions

There is one flaw to paying bills automatically. It’s easy to miss those small ones, like subscriptions you no longer need. You can’t fault the advantages of auto pay because you want the ability to pay your bills on time. However, auto pay opens the door to spend unnecessarily. Reviewing your bank or credit statements often is a surefire way to prevent this.

​If the idea of checking bank and credit cards statement for unnecessary subscriptions seems daunting. Consider subscribing to a service that can monitor your bank or credit card account automatically. One to consider Rocket Money.

10. Ignoring The Need For Financial Literacy Is A Bad Money Habit

Financial literacy is an essential life skill that empowers individuals to make sound financial decisions, plan for the future, and achieve their financial goals. Ignoring financial literacy can cause poor money management, missed investment opportunities, and financial vulnerability. By actively seeking knowledge and adopting responsible financial practices, individuals can improve their financial literacy and build a stronger foundation for their finances. Neglecting to educate yourself about personal finance may hinder your ability to make informed decisions. Invest time in learning about budgeting, investing, and managing debt.

There are many tools you can use to make informed decisions about your finances. Read more about financial literacy and learn about tools you can use on CauseLabs’ website.

11. Not Negotiating

Whether it’s buying a car, a home or the cost of your car insurance. It’s possible to save significantly if you reach out to companies you use regularly. When you buy a home, you don’t just pay when the seller want. When you buy a car, you make sure the cost is reasonable before committing. These are all negotiation tactics you would use for any large investments. Why not do the same with car insurance, the company that provides your cable and internet? Failure to negotiate can cause missed opportunities to save money on purchases, loans, or even your salary. Practice the art of negotiation, not just to get the best deals, but to keep more of your hard-earned money.

Before entering a negotiation, make sure you understand fully what you are asking for. Referring to number ten above, embrace financial literacy. The more you know, the more compelling your ask will be.

12. Emotional Spending Is A Bad Money Habit Worth Changing

Emotional or stress spending can be a significant financial obstacle. It can lead to unnecessary debt and hindering progress toward achieving your financial goals. Understanding the triggers of emotional spending and adopting healthy coping mechanisms are crucial steps in managing emotional spending. Cultivating self-awareness is key. Also, by implementing practical strategies, individuals can manage their triggers and achieve a healthier relationship with money. Using retail therapy as a coping mechanism for emotional stress is unhealthy for both your mental and financial well-being.

The reason for emotional spending is just as relevant as your need to take charge of your finances. Honestly answer the question: Why? Yes, spending your money because of emotional or stress isn’t a good thing for your finances. Neither are the triggers that cause the spending. Understand why you do it, and it will be half the battle won for preventing it.

Related: Stress spending. Is it keeping you poor?

13. Neglecting Retirement Savings

Ignoring retirement savings is risky and can jeopardize your financial security and independence during retirement. Being proactive now and prioritizing retirement savings can build a solid financial foundation for the future. Not to mention enjoying a comfortable and stress-free retirement. It’s never too late to contribute towards your retirement, but the sooner you begin, the more time investments have to grow and secure your financial future. Start contributing to a retirement account early and consistently to secure a comfortable retirement for the latter years.

Contributing towards a retirement can be as simple as taking advantage of a retirement plan (401K) most companies offer. Usually, companies match employee contributions to a certain percentage. That percentage varies with most companies. Another tip to consider: If a 401K isn’t an option, then consider leveraging another benefit most companies offer. Use direct deposit to deposit a small amount automatically each paycheck to a savings account. After accumulating enough funds into the account, you can move it to a low-risk investment and saving plan that guarantees growth. This is another reason number 10 above is so essential.

14. Over-reliance on Loans

Over-reliance on loans to fund lifestyle choices or for certain emergencies can create uncertain financial situations. When we become dependent on loans to offset debt, it can reduce savings and restricted financial freedom. Using caution when taking out loans is a strategic choice. Consider prioritizing financial planning and seeking alternatives to reduce the need for borrowing.

Is there a point where borrowing is the best option? Absolutely. If accumulated debt is a prohibiting your ability to follow a budget or meet daily living needs, then a low interest loan may be the best option. By managing finances proactively and seeking professional advice when needed, it’s possible to achieve a secure financial future.

If a loan is to offset debts for credit card over-use then consider destroy the credit cards before paying them off.

15. Risky Investments

Risky investments carry significant financial risks that can lead to severe loss and negative consequences. It’s essential to exercise caution, conduct thorough research, and make an informed decision before an investment. It’s a better option to focus on long-term financial planning, diversification, and seeking professional advice to achieve financial goals. Engaging in gambling or high-risk investments without a proper knowledge and understanding of what’s involved can lead to significant financial loss and preventable emotional stress. Invest in assets with a sound risk-reward balance and avoid potential financial peril.

Before any investments, risky or otherwise, seek the advice of a financial advisor. If they are confident with your choices, they will tell you and share a realistic log-term projection.

16. Gambling

It’s one of the most prevalent way to prevent financial success. Whether it’s frequent visits to the casinos, betting on sports, or poker, gambling can impact your life negatively. It can be an obsession because the idea of winning big is addictive. Even though gamblers realize the probability of winning is extremely low, they want to believe it could be them. That they could be the winner. The idea of potentially winning excites them. However, the drawbacks aren’t worth the odds. Gamblers develop stress-related disorders because they lose more than they win. They are prone to financial problems because of the continuous taxing of their financial resources. Without a doubt, gambles are prone to end up in bankruptcy, furthering a strain on personal and professional relationships.

If gambling is making your financial life difficult, then consider getting help. Gambling addiction is a serious compulsion that can impact more than just your financial life. Talk with someone. In the United States, you can call the National Gambling Helpline. Follow the link below to get the number to call.

Related: The National Gambling Helpline.

17. Trying To Keep Up with Others

Comparing your lifestyle to others and trying to keep up can cause overspending and unnecessary financial loss. Most know what the saying keeping up with the joneses means. Because some people use others as a benchmark to judge whether they are doing well financially. For instance, your neighbor just purchase a new car and suddenly you realize you need one too. Failure to not keep up means cultural and financial inferiority. This approach can lead to financial ruin. It doesn’t matter what someone makes. If the choice is to spend beyond financial means, the effect will be financial ruin.

​Instead of focusing on what your neighbors or acquaintances have, remind yourself of what you really want. Pursuing your personal goals and interest is a better path to financial success.

18. Ignoring Unnecessary Fees

Technology has made it possible to do most financial transactions online and automatically. Tech advancement has created conveniences that can blind us to potential unnecessary money loss. For instance, these fees are usually because of the financial institution we choose to bank with. Choose to be more vigilant of these fees. Being careless about bank fees, such as ATM charges, and minimum balance penalties can add up. Pay attention to these fees and opt for non-fee options when possible.

​Before opening a checking account, find out if they will charge you a fee for using ATMs outside of your bank of choice. If the bank says you can only use their ATM to prevent a fee, then consider joining another bank.

19. Overpaying for Insurance

Here in the United States, unless you are below poverty level, we predicate health insurance on the type of company you work for and the quality of health insurance they offer. With health insurance, your choices are based on your situation. However, if you drive, your auto insurance is a different matter. If you don’t own a car outright, the car insurance is the second biggest expense for driving. It makes sense to get quotes and compare them to choose the one that offers the coverage you need at a lower cost. We also lose money when we choose to stay with a company out of complacency and not because their premiums are competitive.

Annually shop around and compare your auto policy premium to ensure you’re getting the lowest cost while maintaining the coverage you need.


20. Not Diversifying Income Sources

Diversifying income sources is a fundamental aspect of building a strong financial foundation and mitigating the risks associated with relying on a single income stream. By creating multiple streams of income generation, it’s possible to increase financial resilience. Taking proactive steps to diversify income sources is essential for achieving financial security, flexibility, and long-term prosperity. Relying solely on one income stream can leave you vulnerable to financial setbacks. Explore ways to diversify your income, such as starting a side business or investing in passive income opportunities.

Moonlighting or starting an online business isn’t just about making extra money. It’s also about protecting yourself from an income loss. For instance, you work a 9 to 5, and it’s your only source of income. What would happen if you lose that one source of income? The health of a company isn’t in your hands, nor is the unexpected. Creating another source of income is.

Related: Idea to Profit Series: The Ultimate Guide



Breaking harmful money habits is an important part of achieving financial success. By consciously choosing to change habits that’s within your control, you are paving the way to achieving the success you want. Money and the bad habit you have are not the only reason financial success is just out of your grasp. Mindset, and what we believe, contribute. The people you surround yourself with contribute. However, dealing with harmful habits regarding our finances is a great place to start. There are twenty habits in this post. Which ones do you identify with? We all identify with at least one and it’s up to each of us to take proactive steps towards reversing or preventing it from standing in the way of the financial success that’s just within reach.