9 Bad Money Habits That Are Keeping You Broke

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Say Goodbye To Financial Stress by Eliminating These Costly Money Mistakes

Bad money habits can make it impossible to get ahead financially. Unfortunately, these behaviors will leave you scraping by and struggling to build savings.

Here is the good news. With some awareness and practical tweaks, you can shift away from the habits that keep you broke and living paycheck to paycheck.

Below, I will review some of people’s most common money mistakes and, most importantly, how to turn them around and start seeing real gains in your finances.

Bad Money Habits of People Who Are Always Broke

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Disclosure: At no cost to you, I may get commissions for purchases made through links in this post.

1. Neglecting Financial Education

A lack of basic financial knowledge is a costly problem.

Many never learn personal finance skills, but understanding the essentials can make a big difference. Without this foundation, missing out on simple strategies that build wealth over time is easy.

Commit to learning about saving, investing, and budgeting. You don’t have to become an expert, but a little knowledge goes a long way.

Dig deeper – 18 Tips to Further Your Financial Education

2. Falling Behind on Bills

Late fees and mounting interest can drain your bank account if you fall behind on bills. It’s also an easy way to damage your credit score, which impacts your ability to borrow or rent in the future.

Set up automatic payments for regular bills. Calendar reminders will keep you on track for irregular expenses.

These simple systems will help you avoid unnecessary fees by paying your bills promptly.

3. Paying for Unused Subscription Services

Streaming services, gym memberships, and app subscriptions add up fast. They will drain your finances, primarily when not used to enhance your lifestyle.

Review your subscriptions regularly to see what you no longer need. Canceling even a few could free up cash you can put toward savings or other priorities.

4. Not Having or Ignoring a Budget

A budget is a powerful tool for managing money, but too many people don’t have one or ignore it. A clear budget provides a snapshot of where your money is going and lets you make informed choices.

Start small with a simple monthly budget that tracks your spending categories.

Online tools, an Excel spreadsheet, or a pencil and pad of paper can make this task easier and help you build better money habits by showing you where to cut back.

Must read – Best Ways to Stick to Your Budget

5. Living Beyond Your Means

Constantly spending more than you earn is a fast track to financial trouble. It’s tempting to keep up with lifestyle trends, but doing so often leads to debt.

Focus on living below your means, which means spending less than you make and prioritizing long-term financial health.

Cut back on takeout food and subscriptions, or even downgrade to a more affordable car. These changes will make a significant difference in your pursuit of financial stability.

So far, so good, but there is more to come. Before you continue, PIN IT:

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6. Piling Up Credit Card Debt

Credit cards are convenient, but relying on them can lead to unmanageable debt. High interest rates make it hard to pay down balances, trapping people in cycles of living paycheck to paycheck.

If credit cards are a problem for you, aim to reduce their use and focus on paying down existing balances.

First, prioritize paying off higher-interest debt. Second, consider consolidating debt if that helps you manage payments and interest more effectively.

7. Failing to Save for Emergencies

Without an emergency fund, unexpected expenses—like car repairs or medical bills—can throw your finances into chaos.

Aim to build a small emergency savings fund, even just a few hundred dollars. Financial experts often recommend setting aside 3-6 months of living expenses.

Opening a separate savings account you don’t dip into for regular expenses can help you stay on track. The funds will protect you from relying on credit in unexpected times of need.

8. Choosing Not to Invest for Your Future

Not investing means missing out on potential wealth growth. Relying only on savings won’t build your finances fast enough to outpace inflation or prepare you for retirement.

Start with simple, low-risk investments like index funds or a retirement account. Even small amounts can compound over time, putting you on a better path to financial stability.

If investing feels intimidating, excellent learning tools are available. Here is one of my favorites:

Great resource – Investing may seem complicated, but it doesn’t have to be. For example, I learned a ton from the Financial Freedom Dividend Investing Course offered by Simply Investing.

9. Not Setting Financial Goals

A lack of clear financial goals may lead to unintentional spending and little savings. Goals give you direction and make it easier to manage your money wisely.

Consider your path to financial freedom and set achievable goals, like building an emergency fund, investing, or saving for a down payment on a home.

Track these goals, even through simple milestones. Doing so will keep you motivated and improve your money-saving habits over time.

Helpful Tips – How To Set and Achieve Your Financial Goals

The Bad Money Habits Holding You Back in Life – Final Thoughts

Bad money habits won’t disappear overnight, but tackling them one by one will improve your finances noticeably.

As you let go of these habits, money management and investing become more straightforward. Your stress around finances decreases, and you start feeling more in control.

Even minor tweaks can lead to a powerful sense of financial stability, allowing you to focus more on what truly matters. With consistent effort, better money habits will become your foundation for building the life you want.

Good luck with your finances, and thanks for reading. Before you go, PIN IT:

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Author Bio: Tom Scott founded the consulting and coaching firm Dividends Diversify, LLC. He leverages his expertise and decades of experience in goal setting, relocation assistance, and investing for long-term wealth to help clients reach their full potential.

Kissing Bad Money Habits Goodbye!