20 Toxic Money Habits Keeping You from Financial Freedom

Bad money habits are either developed in adulthood or picked up from our households as children. All in all, bad money habits are hindering you from reaching your financial goals. They are the reason you will always be further from the life you envision. 

If you want to achieve your goals, start by identifying the money habits holding you back and working on dropping them. 

Drop these bad money habits to develop a good relationship with your money. 

1. Impulse Buying 

Glamorous woman with multicolored bags posing isolated background
Image Credit: ViChizh via DepositPhotos.com.

Nothing is really thought over while buying things in the spur of the moment. Everything is triggered by instant emotions, which fade away not long after. 

The items bought often end up being something you don’t need, too expensive or out of your budget, and sometimes even poor quality.  

The items often end up not being used, which is a waste of money. 

 Always plan for any purchases, whether big or small. Let the planning start with small items such as groceries; it will teach you discipline when it comes to other items such as clothes and shoes. 

2. Neglecting Budgeting

Portrait of happy couple counting money together at home
Image Credit: AllaSerebrina via DepositPhotos.com.

Your budget will help you visualize how you spend your money and be able to redirect it to the right course. Not having a budget will 100% have you spending money on things you do not need at the expense of those you cannot survive without. 

Always have a budget that highlights all your varied and fixed expenses. Learning to stick to it will move you steps closer to your short-term and long-term financial goals. 

Not having a budget increases your chances of sinking into debt, overspending, not saving, and being unprepared for emergencies. 

3. Carrying Credit Card Balances

Upset woman in stress holds bank card and talks on phone.
Image Credit: megaflopp via DepositPhotos.com.

Not paying your credit card balances will have you paying high-interest fees, which will generally injure your finances. 

Besides the high-interest fees, late payments could lower your credit score. This would make it very difficult for you to borrow money when needed. 

And yes, late payments could affect your financial history for years; clearing the mess sometimes becomes very difficult. 

While using credit cards has its pros, you should do it responsibly. Avoid spending more than you can pay at the end of the month. 

4. Ignoring Financial Goals

Young handsome man holding bunch of dollars banknotes
Image Credit: krakenimages.com via DepositPhotos.com.

Always have your short-term and long-term finances. What do you want to achieve at the end of the year? How are you going to achieve it? For example, do you want to reduce your debt by 30%? How much money are you going to put into debt payment to achieve this goal? 

Your long-term financial goals should capture where you see yourself in 10-20 years. Maybe having saved enough for your child’s college education? Or probably living a comfortable retirement life? Put into action plans that will help you achieve these goals. 

Saving money with no goals in place will have you splurging it all at any slight inconvenience. 

5. Not Tracking Expenses

Man angry at bills he needs to pay.
Image Credit: Elnur/Shutterstock.

Tracking your expenses will help you plan and budget better. It will also help you stay within the limits of your budget. Your budget for this month does not have to be the same as for the next. You can always upgrade it to suit your financial needs better. 

Not tracking your expenditure can make you spend more than you earn without knowing it.  Track your expenditure to the last coin; it will help you determine areas you overspend in and how to improve. 

6. Spending To Impress Others

Group of happy friends shopping
Image Credit: macniak via DepositPhotos.com.

With the age of social media influencers, and people living lavish lives on social media, it is very easy to get tempted to follow suit. 

You do not need those fancy shoes just because everyone now has them. You do not need to move to that luxurious apartment just because your favorite social media influencer motivated you to. 

Stay within your means, and don’t spend a coin to impress people. 

In our day-to-day lives, we spend so much money to impress our friends and family. It could be going out to restaurants with them or buying them expensive gifts. While there is nothing wrong with showing kindness to the people you love, ensure the amount you spend is within your limits. There is no need to splash money on your friend’s birthday gift only to end up with no money for groceries. 

7. Frequent Dining Out

Grilled salmon with mixed salad and avocado cheese burger sitting on table with white table cloth in fine dining restaurant with window light.
Image Credit: Sara Nicole Garavuso/Shutterstock.

Frequently dining out is a huge waste of your money. Stopping it today and cooking at home would save you lots of money. 

Create meal plans, buy ingredients, cook in batches, and freeze for weekly consumption. This way, you will save money, time, and effort. 

You should find alternatives if you frequently dine out to socialize with friends. You can invite them over and prepare a meal at home. You could also socialize over other hobbies, such as hiking together or visiting free art galleries and museums. 

8. Paying For Unused Subscriptions

Hands holding a tablet with major streaming logos, Netflix Hulu, amazon video, HBO, And Disney Competing video streaming subscription.
Image Credit: Sadie Mantell/Shutterstock.

According to Statista, subscription e-commerce generated $23 billion in 2020. The figure was then projected to hit $28 billion in 2023. 

 This means people are paying for more and more subscriptions. 

But do you need that subscription you timely pay for? Do you even use it? Why pay for Amazon premium when you only order once in two months? Why pay for Netflix when the only time you have to watch is over the weekend?

You have no business paying for that subscription if you do not use it. Drop that subscription and save that money. 

9. Buying Brand Names Unnecessarily

In a accessories store beautiful lady customer looking at the bags from the shelves while one charismatic salesman wants to help the customer
Image Credit: spoialabrothers/Shutterstock.

Whether it is groceries or clothes, there is no need to spend so much on brand names. A lot of times, their quality is not as superior as it is portrayed to be. 

You can get equally good knock-offs for way cheaper. This is especially true for clothes, bags, and jewelry. Get the replicas and save your money for something else. 

For groceries, go for generic names. It is always difficult to tell them apart from their brand-name counterparts. 

10. Using Retail Therapy

Beautiful young woman with shopping bags on color background.
Image Credit: Pixel-Shot/Shutterstock.

Had a bad day at work? Those shoes you have been eyeing may cheer you up. 

This is how retail therapy works, and the only thing it’s doing is hurting your finances. 

Stop going to the mall searching for items to cheer you up after any minor inconvenience. Find other better ways to cheer yourself up. 

 It could be watching your comfort show, calling a friend, or relaxing in a nice bath. 

While retail therapy is often perceived as making impulse buys to cheer yourself up after inconveniences, it could also go the other way around, which is making purchases to “congratulate” yourself. It could look like deciding to order takeout every time you beat a deadline. While it will make you feel good then, it undoubtedly dents your finances. 

11. Not Saving for Emergencies

Close up of man holding pink piggybank while woman putting coin in it.
Image Credit: Ground Picture/Shutterstock.

A study done by Bankrate revealed that 22% of American adults had no emergency fund that could cover a $400 emergency. 

So, what happens when an emergency hits? Take a payday loan? You see how bad it can get. The options you are left with when an emergency hits you could mess up your finances for years. 

Set an emergency fund and start saving as much as you can. Experts agree that a sufficient emergency fund should be able to fully cover 3-6 months of your expenses. 

12. Overindulging in Entertainment

man toasting with beer
Image Credit: DmitryPoch via DepositPhotos.com.

Entertainment is one of the most expensive things that is not worth your money. No, I am not saying that you should live a boring life. You can still have fun but affordably and responsibly. 

One thing you should drop is going clubbing from Friday right through Sunday. Alcohol in clubs costs way too much than in grocery stores. You do not need to be splurging that much money every weekend. 

While many people love how entertaining traveling is, you certainly do not need to be flying out of town every month. You don’t need to be going to that amusement park every weekend.  

Entertainment can be costly. Overindulging into it is costing you a fortune.

Start by finding cheaper or free options and save that money. 

13. Ignoring Interest Rates

woman holding sheaf of bills
deagreez1 via DepositPhotos.com

Never accept the first rate offered when taking any form of loan. There is almost always a better option waiting for you out there.

Go shopping from different lenders and take your time to find the best interest rates out there. 

Remember, lenders stay in business by giving you high-interest rates. The higher they make it for you, the lower the risk they have. Don’t be gullible; explore how much you’ll pay them back in the long run, and try to find better options.

14. Avoiding Retirement Savings

Senior Woman With Piggybank Lying On Sofa
Image Credit:
racorn via DepositPhotos.com.

Life gets very uncertain when you stop working. This is why you need to set up a robust retirement fund while still working. 

With no retirement fund, you may have to work until you die, survive on credit card loans, or become a financial burden to your family. 

If you want to have peace of mind in your old age, start saving up for retirement. The fund can help you grow money over time, have a kitty to fall back on in an emergency, and even have early retirement options. 

15. Paying Full Price

Portrait of angry furious offended senior person with bob hairdo wear pink shirt scream in conflict isolated on blue color background.
Image Credit: Roman Samborskyi/Shutterstock.

Paying for total-price purchases may seem like a good idea, but it makes you miss the benefits of buying now and paying later. 

 For starters, paying full price is not doing any justice to your credit score. Consider payment plans, credit cards, or loans when making a big purchase, such as a car or a house. 

It is also a great way to not blow your budget and to have to go back to start surviving on loans. 

16. Ignoring Financial Literacy

Husband and wife discussing investment plans with financial advisor
Image Credit: Kaspars Grinvalds/Shutterstock.

Ignoring financial literacy will have you making the wrong decisions, or missing out on great opportunities. Take classes and read about saving, investing, budgeting and personal finance management. 

Find sane expert advice and learn how to earn, save, protect, borrow, spend and manage your money. 

Ignoring financial literacy is a sure way to not achieve your full potential. There is usually something new you can learn; get educated to explore your full potential.

17. Gambling or Risky Investments

Young handsome man playing texas hold'em poker
Image Credit: Hugo Felix/Shutterstock.

Whether commercial or sports betting, the entire thing can be very addictive. People sink into debt just to fuel their gambling addiction. 

While gambling addiction comes with all sorts of issues, the financial bit is one of its major cons. Compulsive gambling is the strong urge to keep doing it despite its strong side effects on your life. It may look like deciding to sell your property to keep going back to the casino. 

In short, compulsive gambling can move you from grace to grass real quick. 

Gambling and other high-risk investing, such as currency trading, are very risky. Yes, if you are lucky, it may work. People win lotteries, and so can you. But the chances are said to be 1 in 300 million. It is just a long shot that may not be worth your time. 

18. Using Payday Loans

Payday Loan
Image Credit: garagestock/Shutterstock.

Payday loans are costly. Their interest rates are typically outrageous; they can as well pass as predatory. 

 Borrowing a payday loan is very easy, even if you have a bad credit score. Usually, the benefits are short-term until the real chaos kicks in. 

With their high-interest rates, it is very easy to get trapped in an unending cycle of debt. 

Always have an emergency fund you can fall back on. It will save you from taking payday loans when emergencies strike. 

19. Hoarding Unnecessary Items

Shocked curly haired woman stunned by big sales in second hand grabs clothes sticks out head through pile of yellow and black clothing poses indoor.
Image Credit: Cast Of Thousands/Shutterstock.

According to the Anxiety & Depression Association of America, hoarders are almost always sinking into debt. 

Hoarders keep buying items they do not need in hopes that it will make them happy. They keep splashing the money on unnecessary items until they have no more. They, then, have to get into debt to buy the items they need to survive. 

If you keep buying items and have difficulty discarding those that are no longer helpful, you may want to seek professional help. 

20. Not Planning for Major Expenses

Judgy and skeptical asian senior woman grimacing displeased, pointing finger upper left corner unamused, standing over white background.
Image Credit: Mix and Match Studio/Shutterstock.

Whether buying a car, repairing a house, or taking a vacation, you should always plan for significant expenses. 

Take time and evaluate your financing options. Find how you will make space for the expense in your budget. For instance, you can drop one of the things in your life to save up for a car. 

You cannot just get up one day and head to a showroom and decide to get a car. While you may get financing help from your bank and other lenders, the repayment options may not be friendly. 

Plan and save up as much as possible to put a bigger down payment. 

12 Items Frugal People Proudly Exclude From Their Shopping List

Old Man in a hat as a cowboy.
Image Credit: Thomas Mucha/Shutterstock.

Frugal people are known to spend their money wisely. They live within their means and don’t spend a lot of money. According to a thread on Quora, here are some common things frugal people never buy.

12 Items Frugal People Proudly Exclude from Their Shopping List

23 Side Hustles You Never Considered That Make More Than Your 9 to 5

woman warrior. woman holding sword
Image Credit: Avrora-Andrey via DepositPhotos.com.

Have you ever wanted to make a lot of money from a side hustle and quit your 9 to 5? You may know about the typical side hustles, but I bet you never even heard of these lucrative side hustles!

23 Side Hustles You Never Considered That Make More Than Your 9 to 5

9 So-Called “Frugal” Habits That Are Actually a Waste of Time and Money

woman laying under knitted blanket
Image Credit: serezniy via DepositPhotos.com.

Not everything is frugal! I am sure you have read articles and tips that promote frugal living and give some ideas that are just not frugal! These frugal myths float around and sometimes even cost people a lot of money!

9 So-Called “Frugal” Habits That Are Actually a Waste of Time and Money

10 Stupid Scams People Won’t Stop Falling For

Doctor in corruption concept with being offered bribe.
Image Credit: Elnur/Shutterstock.

It seems like every day there is a new scam popping up, promising to make you rich or solve all of your problems. Yet, despite the prevalence of scams and the numerous warnings about them, people still fall for them.

10 Stupid Scams People Won’t Stop Falling For

20 Hilariously Outdated Pieces of Boomer Advice That Leave Millennials in Stitches

Hipster style bearded man.
Image Credit: Lemon Tree Images/Shutterstock.

From lectures on frugality to hard work, Baby Boomer advice is never in short supply. But what happens when that wisdom doesn’t seem to fit with the experiences of a millennial? Some advice needs to be left in the past.

20 Hilariously Outdated Pieces of Boomer Advice That Leave Millennials in Stitches


This article was produced and syndicated by A Dime Saved.