March 8, 2024

5 Bad Money Habits That Are Keeping You Poor Quit Immediately

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Think you’re being smart with money? Think again. Check over these 5 bad money habits to make sure you’re not accidentally throwing your money away … while THINKING you’re doing so great.

Bad Money Habit #1 - Economizing on Necessities.

Trying to save money by canceling the basics is a bad idea. 

The biggies are:

  1. Insurance (of which health insurance, car insurance, contents insurance are all you really need to worry about; life insurance too, if your death would leave family member in financial hardship) 
  2. Dental checkups and basic, necessary dental maintenance (porcelain veneers are not necessary; professional teeth-cleaning is not necessary; fillings are)
  3. Anything you have a pre-existing, legal obligation to pay for (car payment, existing gym membership, etc)

Trying to save money and improve your financial situation by economizing on these necessities will only bring you more trouble in the long run.

This is a super bad money habit that you need to quit immediately.

I have a friend who’s trying to save money fast to build her emergency fund. This friend has a large Great Dane.

Anyone who knows anything about big breeds knows that the bigger the dog, the more health risks inherent).

My friend knows this also, so she took out pet insurance when he was a puppy to cover any unforeseen accidents or health problems as the dog grew older.

After 3 and a half years with no claims made, she was considering canceling her pet insurance – at a cost of $70 a month – to be able to put more money in her emergency fund but decided to wait a while and think about it.

Literally one week later, the dog ruptured the ligament in its rear knee and needed $5,000 worth of surgery that she would otherwise have had to pay for herself. 

Another friend canceled the third-party insurance she had on her second-hand station wagon because she wanted to pay off her credit-card debt faster.

Two weeks later she dinged a car while backing out of a tight parking spot and knocked its rear-view mirror off.

The car turned out to be a German luxury sedan with parts that had to be shipped in from Germany.

It cost her more than $4,000 to import the necessary parts and replace that one rearview mirror. 

That $4000 would have bought a lot of third-party insurance.

When I was a student at university I didn’t get dental checkups because I ‘couldn’t afford to’ (I preferred to spend my measly weekly income on parties and new jeans than things like teeth and health which was a bad money spending habit). 

Three years later, I graduated, got job, and got a dentist, in that order.

On my first visit, I found that I had $1,900 worth of fillings that needed replacing and redoing. 

One and a half years after that, I finally went back to actually get the work done by which time the fillings had turned to crowns, and the cost was now $2,900. 

Don’t try to save money by economizing on the basics. It will hurt you in the long run. I promise.

Bad Money Habit #2 - Being careful with big purchases, but not keeping track of the small stuff.

Most people shop around for the purchase of a new car, a house, or a holiday but they’ll spend an extra $50 a week on groceries because they can’t be bothered to clip coupons or shop at the less-expensive supermarket across town.

Or they’ll stick rigorously to their shopping list and then impulsively add an extra $20 worth of candy to the cart, a new flavor of lip balm for their teenage daughter at $8 a tub, $10 worth of chew toys for the dog, and a bottle of cheap red to go with dinner at $12.50.

Then on the way home, they go to rent a video, and get socked with $16 worth of overdue fees.

That’s an extra $60 on unnecessary impulse purchases right there which is again a bad money habit that will keep you poor and broke. 

If this is your regular money spending habit, your discretionary income can very easily be sucked into the consumer vacuum - and you’ll literally have no idea where it all went.

Look: I get it. Scrimping and saving is not pleasant. It’s not fun to decide against buying candy because it’s ‘not on the list.’

And it’s not like you can avoid paying overdue fees, unless you want to ruin your credit rating.

So here’s the suggestion that’ll actually help you to save money WITHOUT feeling like a perpetual pauper: Just be mindful of what you’re doing.

Spending money here and there without planning the purchase can be fun, and makes you feel spontaneous and free.

But you must be AWARE that you’re doing it. Do you really want to spend $60 – fifty dollars, that’s a lot of money – on small impulse purchases that won’t really improve your life?

Do you really want to incur a fee of $16 – that’s your ‘impulse’ bottle of wine right there, with change left over for a candy bar – simply because you couldn’t be bothered to drive down and return the movies on time last Sunday afternoon?

Don’t let laziness and lack of mindfulness make you poor. Don’t let bad money habits interfere with your ability to buy nice things – things you actually want – for yourself and your family.

Here’s How That Extra $60 Could Be Converted to Good Money Spending Habits From Bad Money Habits.

  1. $60 could buy your daughter a whole face of new makeup. 
  2. Or a nice dinner out for you and your spouse.
  3. Or a month’s worth of brand-new books from Border’s (three months, if you buy second-hand).
  4. Or half a pair of new jeans – or one full pair, if you don’t buy designer.
  5. Or four cocktails for you and a friend at a trendy bar.
  6. Or petrol for the car for a week.
  7. Or enough candy to last you six months.
  8. Or a really nice designer face-cream.
  9. Or fruit and veggies for 2 weeks.
  10. Or two brand-new DVDs to own.
  11. Or a gym membership for 3 months

Don’t throw your money away on meaningless impulse purchases have control on your emotions and save it for the stuff that you really want! 

The best and most efficient way to do this is not to mess about with detailed shopping lists (although this certainly helps); the main thing is simply to be mindful of the items you choose to spend your hard-earned money on.

Think about whether that purchase will really make you happy or whether you’d rather buy something else, instead. You’ll feel richer, your home will contain only the things you truly love, and you’ll be truly happier.

#3. Writing down every purchase to ‘keep track’ of your money spending habits

Tracking your money spending habits is, in the vulgate, a pain in the ass.

I’ve had the idea ‘sold’ to me by various people, financial ‘experts’, and money-saving gurus (including the otherwise-fabulous ‘Your Money Or Your Life’ authors Joe Dominguez and Vicki Robin)

I’ve tried it multiple times myself and it just does nothing for me.

For a start, I don’t like creating these detailed lists for no apparent reason. What am I supposed to do with them?

Am I meant to save them in a drawer somewhere? Input them into a budgetary spreadsheet on my computer? Burn them?

And do I really have to cart around a pencil and notebook with me, and write down everything I buy (“chewing gum, 83c”)? Waste of time.

(Also, I’ve never really enjoyed looking like a notebook-toting obsessive-compulsive purchase-scribbling lunatic in public, either and yet I feel that’s how I look when I neurotically write down every. Last. Thing. That I buy in my little pocket notebook.)

Instead of cramping your style with lists, pencils, and spiral-bound notebooks, here’s a better idea:

If you take care of ‘the big stuff’ – mortgage/rent, insurance, debt, utilities – then whatever you’ve got left over is yours to play with.

Don’t worry about how to spend it. Don’t worry about trying to save it.

And DEFINITELY don’t worry about writing down where every last damn penny goes!

Instead, know this: As long as the big stuff comes ‘off the top’ – as long as you pay for all that important stuff FIRST, before buying ANYTHING else – then you can kick your heels up with whatever’s left over.

Writing it down will only waste your time, irritate you, and create a lot of unnecessary lists floating around your house.

Just take care of the big stuff first - and then do whatever you want with what’s left. This will create new money spending habits pattern in your life.

#4. Trying too hard to save money doesn't work either.

Many people who find themselves in a serious tight spot with money end up scrimping, saving, and really PINCHING those pennies they make themselves absolutely miserable in the name of ‘getting out of debt’ or ‘saving for retirement’ and then, a couple weeks (or even just a couple days) later, they find themselves unable to take the pressure any more, and having a big blowout ‘because they’ve earned it.’

Here’s how this works: Trying too hard to save money can make you do STUPID things with your money.

It’s like dieting. If you eat nothing but lettuce for a week, you can bet you’re going to have the mother of all binges pretty soon.

The boredom and the restriction will get to you - and you’ll end up sticking your head in a gallon of Ben and Jerry’s Chunky Monkey before too much longer.

Yup: trying too hard to save money creates a BINGE mentality with your checkbook!

Look: if you have $350 left a week after paying for rent and utilities theoretically, you could put $300 a week towards credit-card repayment, leaving yourself $50 for food and transport.

Theoretically, you COULD survive this way for quite some time – eating beans and rice, rice and beans, taking the bus to work, and coming straight home each day so you don’t accidentally spend any money.

Of course, theoretically, you could also survive on dry bread and water for weeks at a time.

And you could, theoretically, spend your weekends staying home and never spending any money at all on movies, socializing, or so much as an ice-cream from the vendor in the park.

Here’s the thing, though: these sorts of lifestyle choices – and this sort of debt-repayment plan – will create a feeling over time of pressure growing and growing.

 You will start to feel more and more miserable, left-out, and put-upon by circumstance.

And sooner or later, you’ll blow. You’ll go stir-crazy and throw a big party at your place (and then spend the next 4 days washing the ash and broken glass out of the carpet.)

You’ll go mad and order 12 pizzas from Sbarro’s and four chocolate-chip waffle cones from Baskin Robbins’.

Or you’ll take your credit card out shopping one sunny Saturday afternoon and come home with six bags of goodies and another $1,500 on your debt lineup that you wouldn’t have to deal with if you’d been smarter and more MODERATE in your pay-back plan.

Hey, I know how this stuff goes. I’ve been there myself, more than once. And I’ve spent YEARS learning how money works and, more importantly, how the human mind works around money.

And one thing that most people need to realize is that the ‘beans and rice, rice and beans’ method may look good ON PAPER (‘wow, I can have my debt paid off in just 10 months this way!’) but real life has a funny habit of not resembling at all the ‘on-paper’ version.

As Samantha from Sex and the City put it: ‘Good on paper? Bad in bed.’ and it’s the same with money.

Yes, you must pay off your debt. This is a priority. It will be hard, and you will make some sacrifices.

But you’ve got to have enough left over to give yourself some semblance of a life in the meantime.

I’m not saying you can continue to buy yourself whatever you want, whenever you want it – limits must be laid down.

But give yourself some scope for enjoyment in the meantime!

This is the only way that you can, quite literally, forget about your debt until it’s been paid off.

When you put some money towards that debt – but not so much money that you’re going CRAZY in the meantime – yeah, you may end up paying more in interest but WHO CARES if you pay more interest, as long as you actually get the debt paid off?

If you stay on the merry-go-round of trying to do what looks good ‘mathematically speaking’ and ‘on paper’, and ignoring what ACTUALLY needs to happen for you to stick with it and pay that debt off (or save up, or whatever), then you’ll be on that merry-go round for a LONG time.

Trust me. Doing it the smart way is the ONLY way, because the smart way is the only way that WORKS.

Make the minimum repayment, and add as much on top of that as you COMFORTABLY can.

If you have lots of different debt, single one out for this treatment, and make the minimum repayment on all of the others. When you pay off that first debt, don’t change the amount you’re putting down; simply shift it to the next debt.

Continue in this way until they’re all gone. It will take awhile – but not as long as FOREVER, which is how long it’ll take if you keep doing what you can’t stick with.

And in the meantime, you get to live a life worth living – and literally FORGET about those debts until they’re all gone. Stop TRYING TOO HARD!

#5. Scrimping on necessities, but being unable to scrimp on pleasures.

I know someone who won’t get her car serviced because she’d rather put that $100 towards her emergency fund but she’ll spend $250 on designer skincare without batting an eye, $50 on alcohol for a party, and $30 on new eyeshadow so she’ll ‘look the part’ when socializing.

This kind of behavior is sheer madness and it falls under bad money habits category.

Obviously, we’d all RATHER spend our money on the ‘fun and frivolous’ stuff but none of that frivolous stuff will do much to cheer you up when your car dies and you have to buy another one (or walk to work each day, even in the rain, even when you’ve got a hangover, and even when you’ve just had your hair blown out.)

I’m a big fan of spending SOME money on frivolities – without that leeway, we really do tend to go a bit mental and start indulging in harmful behaviors to ‘let off steam’.

So if you’d rather go to a party than get the dishwasher fixed this week, fine. You can live without a dishwasher. 

Just think carefully about the choices you make to improve your money spending habits.

Your car, for instance, is probably a priority bill: if you’re like most people, you need it to get to work, keep food in the house, and make sure your children can see the doctor when they have a fever of 104.

So if it’s a choice between the party and the car, you’ll probably want to choose the car.

However, some ‘necessities’ (like the dishwasher) aren’t really necessities at all, and can be scrimped on – at least temporarily – without too much damage being done.

But if something needs financial attention that really IS a necessity, make sure you’re funneling the necessary dollars away from your skincare fund and into the place they’re most needed.

The only person who can tell what really is a necessity, though, is you – so don’t drive yourself crazy trying to make everything perfect before you have a little fun with your money!

Well, I will stop here. I hope you loved reading this guide on bad money habits that are keeping you poor. If you enjoyed reading please do not forget to share and comment your thoughts.

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Manish Yadav

My name is Manish Yadav and I’m the owner of the blog "Love Finds its Way". My advice does away with the manipulations and mind games recommended by magazines and the surface level advice of TV gurus… We’ll dive DEEP to you actionable steps you can use today. Over 900,000 men & women have transformed their lives, and I've been featured in Lifehack, Return of Kings, Menimprovement, Urban Dater, and so on...
...My only intention is to help you have all of achieve your dreams and desires and live a beautiful and prosperous life.
And we’re just getting started!

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