TOP 5 BAD MONEY HABITS WE SHOULD ALL STOP NOW
Only Half The Battle
Developing good money habits is an essential piece of the personal finance puzzle. However, equally important is putting an end to bad money habits.
I’ve written previously on what I believe the top 5 good money habits are. Here, I’d like to take a look at the other side of the coin.
The top 5 bad money habits we all need to work on are:
- Living Without a Budget
- Eating Out More than Eating In
- Making Impulse Buys
- Making Big Purchases Quickly
- Relying On Debt
Let’s take a closer look at each of these habits.
Bad Money Habit #1: Living Without A Budget
If you’re a returning visitor to this website, you are already well aware of my feelings about the importance of a budget. For our new visitors, I’ll say this:
The budget is the cornerstone of your financial plan. It doesn’t matter what kind of goals you have, how much money you have, what plan you’re following, etc. If you aren’t telling every dollar you bring in what to do every month, you are not going to achieve maximum success. Period.
A budget is a plan for your money. Put your money on a plan, and make it follow the plan. Living without a budget will be the most important habit to end on this list.
Need help getting on a budget? Great! That’s why I made this site.
Bad Money Habit #2: Eating Out More Than Eating In
It is so, so easy to see all those drive thrus on the way home from work, realize you could be eating in less than ten minutes with little to no work, and find yourself in line without a second thought. But maybe it’s time to have some second thoughts…
I’m very guilty of this. Sometimes, the idea of making my own dinner after a long day of work is just about unbearable. Even making a sandwich can feel like serious labor sometimes. We’re a culture of instant gratification. It’s not a critique, just a statement of fact.
But, not even the McDonald’s Value Menu in all its glory can undercut the cost of carefully planned and well executed meal planning and grocery shopping.
If you want to see yourself with more money at the end of the month, steer clear of the restaurants except for special occasions and eat at home more.
Bad Money Habit #3: Making Impulse Buys
For me, the convenience store immediately comes to mind here. The gas station we use most frequently is set up brilliantly for tricking people into a last minute purchase. The line literally forms between a huge candy bar station and a giant soda station. “Just focus straight ahead,” I tell myself.
I know candy and soda aren’t huge expenses, but everything adds up. And, those things are priced completely differently at a gas station (where the company is counting on you to be impulsive) and a grocery store (where the company expects you to have an idea of what you’ll buy coming in). Don’t pay inflated prices on a whim when you can get the same thing for 20% of the cost.
And yes, I used my own vice here, but you probably have yours. It might be seeing a “great deal” on some clothes, the temptation of the local Starbucks, or even the ease of an Amazon order. I’m not sure WHAT it is, I’m just sure THAT it is.
Commit to resisting the urge to make seemingly harmless but impulsive purchases. You’ll be shocked how much you save!
Bad Money Habit #4: Making Big Purchases Quickly
Just last night I did some research on a piece of software I was interested in using. I opened a trial account, fooled around with it, and decided I had to have it. Then I looked at the pricing. I was ready to start using the software last night, but the cost forced me to step back and sleep on it.
Not surprisingly, this morning, in the light of day, I’m not as sure now. I may still go back and pay up, but the absolute confidence that this was a “need” and not a “want” is not quite as strong.
This happens all the time, if you give it a chance to happen.
Decide what constitutes a “big purchase” for you, or you and your partner, and commit to taking 24 hours before making purchases at that amount. I’m willing to bet you’ll soon find that most things can either wait, or aren’t needed at all.
Bad Money Habit #5: Relying On Debt
Again, long time readers will know I’m not a fan of using debt. Not even “good debt” as some have called it. It’s just not a good habit to have.
Debt creates instability and risk. Even if you have the money on hand to cover your credit card balance and you plan to do so at the end of the month, there is risk. What happens if you have an emergency and need to use that cash? Now you have a month’s worth of expenses on a credit card at 18% interest!
Eliminate unnecessary risk. It’s not worth the miles and it’s not worth the points. You aren’t outsmarting a massive credit card company with more resources than you’ve ever imagined that knows your spending habits better than you ever will.
Ditch the debt.
Conclusion
It’s never fun to take a hard look at our bad habits, but the first step to ending them is to acknowledge and understand them. Hopefully this post has shed some light on some areas that you can improve.
These are all things my wife and I have had to correct at one time or another, and I can tell you from experience, it can be done!
So again, the top 5 bad money habits we all need to work on are:
- Living Without a Budget
- Eating Out More Than Eating In
- Making Impulse Buys
- Making Big Purchases Quickly
- Relying On Debt
Eliminate these habits (and start some good ones) and you’ll be well on your way to achieving your financial goals!
And as always, regardless of your money goals, you can “Bank on a Budget” to get you from where you are to where you want to be!
Developing good money habits is an essential piece of the personal finance puzzle. However, equally important is putting an end to bad money habits.
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Are you feeling brave enough to share a habit you’re working to eliminate? It may help someone else!