These Money Habits Are Keeping You Broke

These Money Habits Are Keeping You Broke

Many dream of achieving financial stability and wealth, but their daily behaviors and decisions often hold them back and keep them broke. The small, seemingly harmless habits can slowly erode your financial well-being. If you’ve ever wondered where your money goes each month or why you can’t save as much as you’d like, this article might shed some light on the matter. There are so many things in our personal finances that can eat away at our ability to save money and grow our wealth. Many we never even notice until digging into our spending habits and bank statements.

I’ve curated a comprehensive list of financial habits that might be causing more harm than you realize. By bringing these practices to light, this article aims to provide the insights needed to identify and overcome your financial hurdles.

We’ll delve deep into each habit, discussing why it’s harmful and providing practical alternatives that can set you on a path toward financial success. Whether you’re a fresh graduate just starting your financial journey or a seasoned professional looking to improve your monetary health, this article offers valuable takeaways. Keep reading to uncover the habits that might keep you from reaching your financial goals.

Key Takeaways

Recognizing these habits is the first step toward building a healthier financial future.

  1. Living paycheck to paycheck
  2. Lack of budgeting or financial planning
  3. Overspending on non-essential items or luxury goods
  4. Not having an emergency fund
  5. High levels of consumer debt
  6. Paying only the minimum balance on credit cards
  7. No investment or retirement savings
  8. Lack of financial literacy or education
  9. Impulsive shopping and spending
  10. No financial goals or objectives
  11. Not tracking or understanding personal spending habits
  12. Frequently eating out or buying takeout meals
  13. Not taking advantage of employer-matched retirement contributions
  14. Keeping up with the Joneses (Competitive consumption)
  15. Regularly buying new cars or other high-depreciation assets
  16. Paying for unused or unnecessary subscriptions or memberships
  17. Avoiding conversations about money or financial health
  18. Relying on windfalls (bonuses, tax refunds, etc.) to make ends meet
  19. Not maximizing income potential (not seeking raises, promotions, side gigs, etc.)
  20. Neglecting to negotiate prices (on goods, services, and bills)
  21. Regularly using payday loans or other high-interest short-term loans
  22. Not regularly checking and managing credit score
  23. Lack of diversification in investments
  24. Avoiding insurance (health, life, home, auto) or under-insuring
  25. Habitual gambling or investing in high-risk ventures without a proper understanding
  26. Delaying payments and incurring late fees
  27. Ignoring small expenses that add up over time
  28. Prioritizing current wants over future needs
  29. Ignoring inflation and its impact on savings and investments
  30. Not seeking professional financial advice when necessary.

Financial success is as much about good habits as it is about earning and saving money. Unfortunately, many engage in habits that may seem harmless on the surface that can lead to financial instability or even poverty in the long run. Let’s examine these common money habits that could keep you broke.

Living Paycheck to Paycheck

Living paycheck to paycheck is a financial treadmill many people find hard to escape. It involves using all of your income to cover your living expenses with no savings or spare cash. You must create space between your earnings and bills by increasing income, lowering expenses, or both.

Lack of Budgeting or Financial Planning

Budgeting is the process of creating a plan to spend your money. Tracking your income and expenses becomes almost impossible without a budget or financial plan.

Overspending on Non-Essential Items or Luxury Goods

Overconsumption is a big problem in our consumer-driven society. It’s easy to be lured into spending money on non-essential items or luxury goods, but these purchases can quickly drain your finances.

Not Having an Emergency Fund

An emergency fund is money that you set aside for unexpected expenses. Without one, you may have to borrow or use credit when unexpected expenses arise, leading to a debt cycle.

High Levels of Consumer Debt

High levels of consumer debt can cripple your financial health. The interest charges alone can take a significant portion of your income, leaving you with less money to save or spend on necessities.

Paying Only the Minimum Balance on Credit Cards

Paying only the minimum balance on your credit card bills can lead to mounting debt. Paying off your credit card balance in full each month or as much as you can afford is essential.

No Investment or Retirement Savings

Investments and retirement savings are critical for future financial stability. If you’re not setting money aside for these, you may be setting yourself up for financial struggles later in life.

Lack of Financial Literacy or Education

Without financial literacy or education, making informed decisions about managing money becomes challenging, leading to poor financial habits.

Impulsive Shopping and Spending

Impulsive shopping can lead to spending beyond your means. It’s essential to plan your purchases and resist impulse buying.

No Financial Goals or Objectives

Without financial goals or objectives, it’s hard to maintain focus and discipline in managing your money.

Not Tracking or Understanding Personal Spending Habits

Knowing where your money goes is crucial for financial success. If you’re not tracking your spending, you might be surprised by how quickly small purchases can add up.

Frequently Eating Out or Buying Takeout Meals

While convenient and often enjoyable, regularly eating out or purchasing takeout meals can significantly drain your wallet. Preparing meals at home can be a healthier and more cost-effective option.

Not Taking Advantage of Employer-Matched Retirement Contributions

If your employer offers matched retirement contributions and you’re not taking full advantage of them, you’re leaving free money on the table. This is a crucial aspect of retirement savings that shouldn’t be overlooked.

Keeping Up with The Joneses (Competitive Consumption)

The pressure to match or outdo the lifestyle of friends, neighbors, or colleagues can lead to unnecessary and financially damaging spending habits. Remember, financial stability is about your economic health, not appearances.

Regularly Buying New Cars or Other High-Depreciation Assets

Cars and other high-depreciation assets lose their value rapidly. Regularly buying new vehicles, for instance, can lead to financial strain, as you’re essentially investing in a rapidly depreciating asset.

Paying for Unused or Unnecessary Subscriptions or Memberships

Whether it’s a gym membership you rarely use, or a streaming service you’ve forgotten about, paying for unused or unnecessary subscriptions is throwing money away. Regularly review and cull your subscriptions as needed.

Avoiding Conversations About Money or Financial Health

Money can be a sensitive topic, but avoiding it won’t improve your financial situation. Open and honest conversations about money can help you identify areas for improvement and develop strategies for financial growth.

Relying on Windfalls (Bonuses, Tax Refunds, etc.) to Make Ends Meet

Relying on irregular income like bonuses or tax refunds to cover regular expenses or pay down debt is a precarious financial strategy. Instead, aim to live within your means based on your regular income.

Not Maximizing Income Potential

You may not be maximizing your earning potential if you’re not seeking raises, promotions, side gigs, or other income-boosting opportunities. This can hold you back from achieving financial stability.

Neglecting to Negotiate Prices

Negotiation can save you significant money, particularly on big-ticket items or services. Not leveraging this tool means you could be spending more than necessary.

Regularly Using Payday Loans or Other High-Interest Short-Term Loans

These types of loans often trap borrowers in a cycle of debt due to their high-interest rates and fees. Regularly resorting to them signals a need for better financial planning and emergency savings.

Not Regularly Checking and Managing Credit Score

Your credit score is a crucial aspect of your financial health. Suppose you’re not regularly checking and managing it. In that case, you might be in the dark about how potential lenders view your creditworthiness, potentially affecting your ability to secure favorable loan terms or even get approved for credit.

Lack of Diversification in Investments

All your investment eggs should never be in one basket. Diversification helps mitigate risk by spreading investments across various financial instruments, industries, and other categories. A well-diversified portfolio can shield you from severe financial losses.

Avoiding Insurance (Health, Life, Home, Auto) or Under-Insuring

Insurance is not a luxury but a necessity. It is a financial safety net when unexpected incidents occur, including health issues, life events, home damages, or auto accidents. Avoiding necessary insurance or insufficient coverage could have catastrophic financial implications when disaster strikes.

Habitual Gambling or Investing in High-Risk Ventures Without Proper Understanding

The thrill of gambling or diving headfirst into high-risk investments can be enticing. Still, without a deep understanding and acceptance of the potential loss, this path could lead directly to financial ruin. High-risk activities should only make up a small, affordable portion of your overall financial plan, if at all.

Delaying Payments and Incurring Late Fees

Consistently delaying payments and racking up late fees is a habit that silently drains your wealth. Over time, these seemingly small fees can accumulate to a significant sum, not to mention the potential negative effect on your credit score.

Ignoring Small Expenses That Add Up Over Time

Those daily cups of coffee, frequent online deals, or monthly subscriptions can appear insignificant individually. However, cumulatively, they can form a sizable portion of your spending. Keeping track of these ‘small’ expenses is crucial in managing your financial health.

Prioritizing Current Wants Over Future Needs

It’s easy to favor immediate gratification over future security. Yet, prioritizing short-term wants over long-term needs often results in financial instability. Remember, the cost of today’s luxuries could be tomorrow’s necessities.

Ignoring Inflation and Its Impact on Savings and Investments

Inflation—the rate at which the general level of prices for goods and services is rising—can eat into your savings and investment returns. Ignoring inflation when planning your financial future might leave you with less purchasing power than anticipated.

Not Seeking Professional Financial Advice When Necessary

There’s no shame in seeking help when dealing with complex financial decisions. Certified professionals can provide advice tailored to your specific circumstances, helping you navigate complex financial situations and take advantage of opportunities you might not have been aware of.


Financial stability requires conscious effort and dedication. Breaking free from unhealthy financial habits is the first step on this journey. From the wise management of investments and insurance to mindful spending and adequate planning for future necessities, each aspect plays a critical role. Moreover, understanding the potential detriments of high-risk pursuits and the value of professional advice in complex situations is vital. The consistent practice of these principles paves the way for a secure financial future, helping to ensure your money works for you rather than against you. Always remember every financial decision counts, no matter how small it may seem. It’s never too late to change your financial habits and positively impact your financial wellness.