10 Money Habits Keeping You Poor (How To Not Be Broke)

10 Money Habits Keeping You Poor (How To Not Be Broke)

Have you ever wondered why you never seem to get ahead financially? No matter how hard you work, the money slips through your fingers before the next paycheck. The culprit could be bad money habits that trap you in a cycle of poverty.

Breaking free of poverty and achieving financial stability starts with identifying unhealthy money habits. Once you know what behaviors are holding you back, you can make a plan to change them. With time and discipline, you can break free of bad money habits and take control of your finances.

Living Paycheck to Paycheck

Not budgeting or saving any income is one of the biggest reasons people get stuck living paycheck to paycheck. When you spend everything you earn monthly, you have no cushion for emergencies or unexpected expenses. A sudden car repair, medical bill, or temporary job loss can be catastrophic without cash reserves.

To break the paycheck-to-paycheck cycle, start budgeting monthly and set aside a portion of each paycheck into savings. Even small amounts like $25 or $50 add up over time. Make saving a habit by automating transfers into a savings account each pay period. The goal is to accumulate enough savings to cover 3-6 months of living expenses for protection.

Impulse Purchasing

It’s easy to get tempted into buying things you don’t need or overspending when swapping that credit card without thinking. Retail therapy feels good at the moment, but buyer’s remorse and regret often follow.

Curb impulse purchasing by instituting a mandatory waiting period for any unplanned purchase over a certain dollar amount. Wait at least 24 hours before going back to buy it. The urge will pass, and you’ll realize you don’t need it.

Overspending on Wants

Spending money on things that bring you joy is okay, but problems arise when too much income goes toward discretionary wants rather than needs. Wants include dining out, entertainment, possessions, travel, hobbies, and more. You must reassess priorities if your rent check bounces because you overspent on desires.

Cut back on discretionary spending categories to shift more money toward needs like housing, utilities, transportation, food, insurance, and debt payments. The 50/30/20 budget allocates 50% of income to necessities, 30% to wants, and 20% to savings and debt repayment.

Not Tracking Expenses

Not knowing exactly where your money goes each month is a massive barrier to getting in control of your finances. You can’t identify waste, reduce spending, or create an accurate budget without tracking what you spend on everything.

Manually recording expenditures is tedious, so use an expense tracking app or create a spreadsheet. Connect accounts to track transactions automatically and categorize each one. Now, you can analyze reports to see where to cut back spending and inform smarter money decisions.

Paying Late Fees

Late payments on bills, credit cards, loans, and other accounts result in costly late fees that add up. Even a single late payment can incur costs and raise interest rates. Set up autopay or payment reminders to avoid missed due dates that negatively impact your finances and credit scores.

Carrying Credit Card Debt

Credit card debt is one of the biggest traps that prevents people from getting ahead financially. Interest charges cause balances to snowball out of control. Make it a habit to pay your cards in full monthly to avoid wasting money on interest. If you already have a balance, pay more than the minimum to pay it off faster.

No Retirement Savings

It’s easy to put off saving for retirement when you’re young, but time is your most powerful ally when investing. Starting early allows decades for compound growth to work its magic. If possible, begin contributing to a 401(k) or IRA in your twenties. Increase the savings rate over time as income rises. Even small, consistent contributions add up substantially over a career.

Not Having an Emergency Fund

Life throws unexpected curveballs that wreak havoc on finances without a robust emergency fund. Job losses, illnesses, car troubles, and home repairs inevitably happen. Having saved 3-6 months of living expenses enables you to handle issues without raising credit card debt. Make building your emergency fund priority #1.

Overspending on Housing

Housing greed is a typical budget buster. Limit housing costs to a reasonable percentage of your income so it doesn’t crowd out other critical spending categories. Ideally, keep housing below 30% of your take-home pay. Get roommates, live further from the city, or downsize to cut housing costs.

Ignoring Your Debt

Pretending debt doesn’t exist is a surefire way to ensure it never disappears. Make a detailed plan to pay down debt aggressively. Target the highest interest rate debt first while making minimums on everything else. Once the first debt is gone, roll its payment into the next. Maintain an intense focus until you’re debt-free.

Case Study: How Cindy Ditched Bad Money Habits and Changed Her Life

Cindy was stuck in a dead-end job, living paycheck to paycheck and gradually accumulating credit card debt. She wanted to change her financial situation but wasn’t sure where to start until a friend recommended tracking her spending.

Cindy started writing down everything she spent each month. She tallied up categories like housing, transportation, food, and entertainment. She was shocked to see nearly half her income going toward dining out, clothes, concerts, and hobbies.

Armed with spending insights, Cindy created a budget that reduced her discretionary spending by 20% so she could increase debt payments. She automated $50 per paycheck into savings. Cindy also got a weekend job to bring in extra income focused solely on debt repayment.

Within a year, Cindy paid off all her credit cards and built a $3,000 emergency fund. She used her extra income to increase retirement contributions. Cindy qualified for a mortgage on a small starter home two years later. She sticks to her budget and savings habits as her income has increased.

Cindy broke the cycle of living paycheck to paycheck by identifying and changing money habits holding her back. Knowledge of her spending, budgeting, saving, and focus on debt repayment completely transformed her financial situation. It wasn’t easy at first, but sticking to good financial habits over time empowered Cindy to take control of her money and create the financial freedom she desired.


You can change your money habits and reshape your financial future, too. Now that you know what behaviors cause people to struggle financially, you can consciously modify them. It takes self-awareness, dedication, and patience, but you can build the money habits that lead to success. The payoff for your effort will be priceless.