7 Bad Money Habits and How to Break Them

If we’ve said it once, we’ve said it a thousand times: managing money isn’t really about understanding the math. After all, most people can subtract expenses from income without a problem. Even learning about retirement accounts and understanding the alphabet soup of personal finance (HSAs, IRAs, 401(k)s) is pretty manageable once you Google it.

In money management, most people struggle with their feelings and behaviors. Some of the most costly behaviors are often habits.

What are habits?

Habits are things we do regularly, often without thinking about them. They can be good or bad, depending on what they are and how they impact our lives. Some financial habits can help us save and spend wisely, while others can lead to monetary problems, more stress, and a terrible relationship with money.

Here are seven bad money habits that can ruin your relationship with money

1. Not tracking your spending.

This is a surefire way to overspend, rack up debt, and make it more challenging to make ends meet. It’s easy to overspend if you don’t know where your money is going until that overdraft fee hits.

Solution: shop with cash or download a money tracking app. Then, set a goal to track your spending for at least a month so you know how much money you’re actually spending.

Check out this episode of the Nav.it money podcast, where Viv talks keepin’ up with the Joneses.

2. Buying things you don’t need and living beyond your means.

This one is two-fold. Humans have an innate desire to fit in. It’s how we survive in society and what drives us to “keep up with the Joneses.” So it’s somewhat natural when your friends buy something, and then you buy something to be like them. The downside is that habit can leave you broke and stressed out. This is one of the quickest ways to derail your budget and dig yourself into a financial hole.

Solution: money mindfulness. Before making any purchase, ask yourself if it’s something you genuinely need or if you could live without it. Keep your spending in check and focus on what’s truly important to you with values-based spending. Bonus points if you talk to your friends openly about money, so there’s no friction if your spending differs from theirs.

3. Using credit cards for everything.

In the words of Mackenzie Stewart, “Credit cards are the Sour Patch Kids of personal finance. Sometimes they’re sour; sometimes they’re sweet.” Credit is a powerful tool to leverage. We use it to buy homes and build businesses. The problem with only using cards? As NerdWallet points out, “research confirms that people do in fact spend more money — often, substantially more money — when they make purchases on a credit card instead of using cash.” After all, it’s easier to swipe a card than count out dollars and cents. High credit card limits also give us a false sense of reality in what we can spend.

Solution: Use cash, choose your credit card carefully, and create a plan for every payment. This leads us to our next point.

4. Not budgeting.

According to one study, 65% of Americans had no idea how much they spent the previous month. Sure, you could stick to tracking what you spent, but a budget takes the money game to the next level. It helps you track your spending and ensure you stay within your limits. With a budget, you plan for every payment.

Solution: make a plan, categorize your spending, and budget regularly. It’s easier with automated and customizable budgeting in the Nav.it money app.

5. Not saving money.

This one is a biggie and can be a hard habit to build. If you don’t have money saved for a rainy day, you’ll be in trouble if something unexpected arises. Hello, emergency fundStart setting aside money each month so you’ll be prepared for whatever life throws your way.

Solution: automate it. Creating new, healthier financial habits is hard unless you create a system to make it easier. Automate your savings with every paycheck or once monthly.

6. Ignoring your bills.

You might receive notifications and reminders in the mail, but if you’ve ever been hit with a late fee, you’re also probably guilty of ignoring your bills. Besides fees, ignoring your bills can damage your credit score, making it more difficult to obtain future loans or mortgages.

Solution: create a routine to address your bills on a regular payment, consolidate your debts, track when payments are due, and automate your payments.r payments.

7. Not investing money.

Investing money is one of the smartest things you can do for your financial future. If you’re not already investing, start small (like $5 a month small) and work your way up. Another big mistake people make is not investing their money. Wisely investing money can help you grow your wealth over time. Not investing is a surefire way to stay stuck in the rat race.

It’s essential to be aware of your money habits and work on breaking any bad ones if you want a healthy relationship with money. You’ll be better equipped to keep your finances on track and improve your financial health.

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