8 Money Habits That Keep You Poor (STOP SELF SABOTAGE)

Most of what we do on a daily basis is automatic like brushing your teeth; you don’t even think about it and most of the time you don’t even realize that you’re doing it

This is especially true with how you handle your money; in this guide, I’m gonna talk about eight money habits that keep you poor

Before recognizing these eight bad money habits I was always in debt and had trouble saving any money but once I realized what I was doing, I started replacing bad money habits with good money habits and that’s exactly what helped me pay off loans in just a few years and to finally start investing my money so that I could work smarter not harder

Your habits have ripple effects that get compounded over time and they ultimately determine who you become and whether you’ll end up rich or poor; that’s why it’s super important to recognize any bad money habits you have early on and replace them with good money habits

Bad Money habit 1: Paying yourself last

Here’s what I mean by this; as soon as you get paid, you pay your rent, your phone bill, your gym membership, you go out to dinner, you buy something nice for yourself and you’re planning to save if there’s any money left at the end of the month

Problem is there’s never any money left to save! Sound familiar?

People who get ahead financially do the exact opposite: They pay themselves first

That means that before they start paying their bills, swiping their cards left and right and giving money to everyone else except for themselves, they put a portion of everything they make into their own pockets first; then they pay their bills and live on what’s left

They prioritize making themselves richer versus making other people riche. People who are good at saving money all understand something called Parkinson’s law

Parkinson’s law is the principle that demands will always expand to consume all available resources; that’s why if you have a week to finish a project; you end up taking all that time to finish it and you were probably pretty inefficient with your time where as if you have just one hour to finish that same project you’ll be super focused and efficient and still get it done so, work expands to consume all available time and it’s the same with money

Your spending will expand to consume all available money, whether you have a hundred dollars or a hundred thousand dollars, your expenses will keep increasing to consume all the money that you have; that’s why making more and more money isn’t always the answer and saving money after you do all your spending is just not gonna work, because your spending will always rise to just eat up all that money

You got to pay yourself first, you gotta treat saving money like a bill; so as soon as you get paid, commit to setting aside 10% or whatever percentage that you can handle and put that towards savings and investments and then just live on what’s left

So if you want to stop letting money slip through your fingers and you actually want to start keeping some of what you make for yourself, then give up money habit number one for good

Bad money habit 2: trying to keep up with friends who have expensive tastes

Do you have friends who always want you to go out to expensive restaurants and go shopping, go on trips with them and stay in nice hotels?

So if you have friends with bigger budgets than yours, then it’s okay to be authentic and say “hey I can’t, I can’t do that because I’m working towards some financial goals right now and I need to save money; it’s out of my budget”

If they are real friends, they’ll understand. Everyone has very different levels of tastes as well as very different budgets, so trying to keep up with everyone around you is going to leave you broke and in debt.

This includes friends as well as people you see on social media; the reality is the average person has very little in savings and an average of thirty eight thousand dollars in debt and that’s not even including mortgages, so a lot of what you see in terms of amazing lifestyles on social media and whatever is often just an illusion

Don’t be fooled; a lot of what you see is not real and chasing experiences just so you can post a cool photo on Instagram or look good to everybody else is a recipe for ending up broke

I think it basically comes down to this; would you rather look rich or would you rather be rich

If you dream about becoming financially independent, one day you have to stop caring what everyone else thinks about you; because no one else is gonna make it happen for you but you just have to learn how to speak up for yourself

Don’t be afraid to turn down invitations or don’t be afraid to just adjust cheaper activities for you and your friends because chances are people will respect you for having your priorities straight and it’ll probably inspire them to re-assess their financial priorities as well

Bad money habit 3: Putting everything on your credit card for the cash back rewards

Now don’t get me wrong, credit cards are amazing but often times I find that people end up spending way more on their credit card than they would have spent otherwise and that basically just cancels out all the benefits of having these credit card rewards

I’m guilty of this as well when I’m considering whether to make a purchase or not; sometimes I find myself justifying it because I’m like “hey, well at least I’ll get miles for it” and this is even if I can’t actually afford it so this is a very very very slippery slope

Ever since I realized this pattern, I’ve just stopped putting everything on my card and here’s what I do instead:

For everyday small items like coffees and cab rides, I just pay for it with my debit card, in cash but if there’s anything that’s a hundred dollars or more like facials and hotels, things like that I basically put it on my credit card, that way it forces me to only buy things I can afford to pay for in cash

Putting things on plastic really has a way of just making you spend a little too mindlessly especially if you’re justifying your spending because of the rewards; so the money habit to give up is to make sure you only put things on your rewards credit card if you have the money to pay for it in cash and don’t justify the purchase just because of the points or the or miles money

Bad Money Habit 4: Having disorganized finances

Having disorganized finances is basically another way of keeping your head in the sand if you have credit cards open everywhere; loans that you don’t really know the balance for and you’re not really sure what you’re spending every month, then it’s really time to consolidate

So there’s a lot of really awesome apps out there that make it super easy to track all your financial stuff. I’ve actually switched over to tracking my finances in a spreadsheet versus in apps cuz I’m just a big nerd and I love my spreadsheets and I look at my spreadsheet to update my net worth every month; that way I can see the progress that I’m making month by month and not only is this hugely motivating but it also forces me to keep my finances very organized because I know where all my money is at all times

Something also helps with keeping your finances organized is choosing a financial institution that offers a wide range of services so that you can do all your financial stuff in one place. The less online usernames and passwords you have to keep track of, the better f

It’s really not hard to get and stay organized with your finances, the key is to just get that courage to really look at where you stand financially and I know it can be a humbling and sobering moment for some people but until you know what your starting point is, it’s impossible to get to where you want to be

How can you get to where you want to be if you don’t know where you are now

So give up the habit of staying confused about your finances, build a habit of staying organized and looking at your numbers regularly

Bad Money Habit 5: Numbing yourself to debts

We live in a society where practically everybody has debt. It’s become totally normal for someone in their 20s to have tens of thousands of dollars of student loan debt and it’s totally normal for someone in their 40s to have a mortgage, a car loan, credit card debt and possibly even be paying off their student loans still but listen up; just because everyone else lives with debt doesn’t make it okay for you to live with debt either

Bottom line, don’t get into debt if you don’t have to just pay for things in cash; don’t do things if you can’t afford it; don’t go into debt for college unless you absolutely have to and you know you’ll get a job that will allow you to pay that off quickly

Don’t get a car loan to buy a car

Money Habit 6: Paying extra due to lack of planning

I used to be the queen of cheap umbrellas because I always forgot to check the weather and I just end up getting caught in the rain and having to run into a store to just buy another umbrella despite having like multiple umbrellas at home

Not planning in advance and being caught unprepared always ends up costing you money; so this could be things like having to take an uber instead of using the bus. It could also be like paying overdraft fees because you didn’t check your account balance

I’m all about YOLO and living spontaneously but if you’re always having to buy things you already have at home or just paying extra fees and interest because you’re unprepared, then just take a few extra minutes to plan ahead; check the weather before you leave the house; leave buffer time in between appointments, look at your account balance every so often and things like that

Even just a little bit of planning will save you tons of money and at the end of the day, having money in the bank is what allows you to really Yolo as much as you want

Bad Money habit 7: Paying too much in taxes

Taxes are gonna be the single biggest expense in your lifetime, so why not do what you can to cut down on your tax bill. Most of the tax blue bowls are for the rich, for people who own assets and businesses but there are a lot of tax loopholes available to the average person as well; for example, most people have a 401 through their employer and contributing to your 401k is a way to directly reduce your taxable income

Bad money habit 8: Putting off investing until you have more money

I mentioned in my first tip, putting things off like saving money and investing for the future; that is a very slippery slope

You might be thinking that you’ll start doing it one day when you have more money but more often than not, that becomes a never-ending cycle of procrastination and excuses. There’s always gonna be reasons why you can’t invest; not enough money, not enough knowledge, not enough time, other priorities etc.

The longer you put off investing, the harder you’ll have to work to get to the same level of financial freedom as someone who starts investing earlier

Someone who starts investing at age 20 can become a millionaire by age 50 by investing just one hundred eighty thousand dollars of their own money, however if they were to wait until age thirty to start investing, they would need to invest almost twice as much of their own money to reach millionaire status by age fifty which means the sooner you start, the less heavy lifting you have to do and the less of your own money it takes to get to a millionaire

Even if it’s just fifty dollars a month, start investing now

Don’t wait. It’s really easy to get started in investing if you just stick your money in some low-cost index funds

If the idea of saving your money just isn’t fun for you, then just try to reframe how you think about it. It’s not about discipline and deprivation, it’s about taking care of future you; it’s a form of self-care and self-care is fun because it makes you feel good and makes your life so much better

If you’ve been doing any of these money habits, just be gentle with yourself. Don’t beat yourself up about it because most of us don’t learn this stuff in school and we don’t learn it from our parents. Most of us people who have good money habits usually just learn it the hard way by screwing up and wanting to do better

I’m definitely not perfect by any means either so even though I’m a blogger that talks about money, a lot of what I talked about in this guide are stuffs that I needed to be reminded of as well. It’s all about having the awareness and the financial literacy to notice whether your daily actions bring you closer to your financial goals or take you further from your financial goals and it’s never too late to replace bad money habits with good money habits and to just improve your relationship with money

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