Money Habits You Must Realize That Keep You Broke

Money Habits You Must Realize That Keep You Broke

In the journey toward financial success, our habits play an instrumental role. They determine whether we remain in the confines of financial strain or break free to experience financial security. People often find themselves in cycles of money-related struggles, unaware that some of their habits might be the culprits keeping them stuck in a pattern of monetary instability. This blog post aims to shed light on ten critical money habits that may be silently siphoning away your wealth, keeping you in a perpetual state of being ‘broke.’ Recognizing and tackling these habits head-on can set the stage for a secure, prosperous financial future. So, let’s dive in and explore these habits, understand their impact, and learn how to turn the tide toward your financial well-being.

10 Money Habits That Are Making You Broke:

1. Not having a good money mindset.
2. Not having financial literacy.
3. Not investing.
4. Not using a budget.
5. Spending too much money on fun.
6. Using credit cards for budget gaps.
7. Not taking full responsibility for your finances.
8. Getting into a big car payment.
9. Having expensive rent or a big mortgage you cant afford.
10. Not having a high-earning career. 

1. Not Having a Good Money Mindset

A healthy money mindset is crucial for financial prosperity. This includes how you perceive money, your worthiness of wealth, and your attitudes towards saving and spending. If you believe money is scarce, hard to attain, or only for the ‘lucky,’ you will likely find it difficult to accumulate wealth. Alternatively, a positive mindset towards money that perceives wealth as abundant and achievable will encourage positive habits like saving and investing, leading to financial growth. If you believe money is only for spending or that money is bad in itself, then you will subconsciously try to get rid of it as fast as you get it. If you believe money is a neutral tool that can be used in many positive ways, you have a better chance of keeping some of what you earn and spending the rest wisely.

2. Not Having Financial Literacy

Financial literacy refers to understanding basic financial concepts like interest rates, the importance of saving, managing credit, and investing. Lack of financial literacy is a significant factor that could cause you to remain broke, as it limits your ability to make informed decisions about your money. This can lead to issues such as getting caught in cycles of debt or failing to save for emergencies or retirement. Educating yourself about money is the second step to not being broke after you have the right mindset about money.

3. Not Investing

Not investing is another habit that can keep you broke. Money that sits in a low-interest savings account loses value over time due to inflation. Investing in stocks, bonds, real estate, or other assets is a proven way to grow wealth over the long term. While investing always carries risk, education, and careful planning can mitigate these risks and help you build a diverse, growth-oriented portfolio. Of course, before you can invest, you must have money left over from spending. Investment capital is the variance between what you earn and what your spend. If you spend everything you earn you will never have any investment capital.

4. Not Using a Budget

Budgeting is one of the fundamental building blocks of good financial health. Without a budget, it’s easy to lose track of where your money is going, leading to overspending and inadequate saving. A budget provides a clear picture of your income, expenses, and potential savings and can help you make informed decisions about your money. A budget spends your money on paper before you can spend it impulsively. However, you must have the discipline to follow your spending plan.

5. Spending Too Much Money on Fun

Everyone needs to have a little fun to balance their lives, but spending too much on leisure activities and unnecessary items can quickly deplete your finances. Balancing your need for immediate gratification and entertainment with your longer-term financial goals is essential. By including a category for fun in your budget and sticking to it, you can enjoy your life now while still planning for the future.

6. Using Credit Cards for Budget Gaps

While credit cards can be a helpful tool in managing cash flow, emergencies, and building credit, relying on them to cover budget shortfalls is a dangerous habit. This can lead to accumulating debt, resulting in high-interest payments that take away your ability to save and invest. Instead, aim to use credit cards responsibly and pay off your balance in full each month.

7. Not Taking Full Responsibility for Your Finances

If you’re not actively involved in managing your finances, it’s easy for poor habits to take hold. This includes not checking your bank statements, ignoring your bills, or leaving financial decisions to someone else. Taking responsibility means staying informed about your financial situation, making conscious decisions about spending and saving, and seeking professional advice when needed. Don’t leave your finances to your spouse; you should know what is happening with your budget, debt, and spending.

8. Getting Into a Big Car Payment

While having a car might be necessary, getting into a large car payment that stretches your budget can lead to financial trouble. Cars depreciate quickly, and high-interest car loans can cost you much more than the car is worth. Instead, consider buying a used vehicle you can afford outright or ensure that any car payment fits comfortably within your budget. Significant car payments are a massive drain on your ability to save and invest.

9. Having Expensive Rent or a Big Mortgage You Can’t Afford

Housing is a significant expense for most people, but stretching your budget to afford a high rent or mortgage payment is risky. If your housing costs exceed 30% of your income, you may find it difficult to cover other expenses or save for the future. It’s essential to live within your means and choose a home you can comfortably afford, even if it means sacrificing some space, location, or amenities. This allows you more financial flexibility and the ability to save and invest more money for future financial stability and growth.

10. Not Having a High-Earning Career

While it’s not a must to have a high-earning career to avoid being broke, it’s essential to realize that the income from your career forms the basis of your financial wealth. If you’re not earning enough to cover your expenses and save, it can be a significant barrier to financial security. Therefore, investing in yourself to increase your earning potential through education, skills development, or entrepreneurship can be a worthwhile endeavor. Knowing your worth in the job market and negotiating for fair pay are equally important.

Key Takeaways

  • A constructive view of money, where wealth is achievable and abundant, is critical to financial success.
  • An understanding of fundamental financial principles is pivotal in navigating financial decisions effectively.
  • Capital appreciation through investment is an essential practice for wealth creation.
  • Budget implementation is indispensable for tracking income, expenses, and potential savings.
  • While leisure and entertainment are necessary, excessive spending can hinder financial progress.
  • Resorting to credit cards to bridge budget deficits can lead to debilitating debt cycles.
  • Being actively engaged and accountable for your financial management is vital.
  • Hefty car payments can strain your budget unnecessarily, considering cars are depreciating assets.
  • Overstretching your finances for high rent or a big mortgage can endanger your financial stability.
  • Enhancing your income through career advancement or self-improvement contributes significantly to financial health.


The journey to financial security is paved with understanding, implementing, and maintaining prudent financial practices. Recognizing detrimental habits is the first step toward making meaningful changes. Shaping a constructive attitude towards wealth, gaining financial proficiency, strategically allocating resources, and responsibly managing debt are critical ingredients to this journey. Above all, taking complete charge of your financial situation, focusing on affordable living, and striving for a career that fulfills your passion and financial needs are the cornerstones of achieving financial freedom. The road might be challenging, but the rewards are worth the effort.

By recognizing and addressing these damaging money habits, you can shift your trajectory toward financial health and wealth. It’s a process that doesn’t happen overnight, but you can transform your financial situation with consistent effort and determination. Remember, the journey towards financial freedom often begins with changing your mindset and behaviors. Start today, and take one step at a time towards your financial goals.