How To Stop Bad Spending Habits: 10 Ways To Change Your Behavior

Having a hard time resisting impulses to buy stuff you don’t need? Here are ten ways you can break the cycle.


Every year, bad spending habits collectively cost people billions of dollars and frequently land them in financial trouble. On the more benign end of the scale, there are people scraping to get by, pay their bills, meet the monthly minimums on credit card balances, etc. On the more serious end, though, there are people whose impulsive buying and other bad financial habits leave them financially underwater, unable to secure needed loans due to poor credit scores, or facing eviction or foreclosure.


Anyone who’s ever fallen into a financial hole as a result of their own bad decisions knows that climbing back out and achieving stability again can be a long and difficult process. Rather than have to go through that, it’s easier and far less painful to avoid getting into that situation in the first place. And the key to that is adopting and sticking with good spending habits. There are 10 great ways to do this.


Make a Budget


One of the foundations for avoiding bad spending habits is making a budget and basing spending decisions on it. Since most people pay their rent or mortgage on a monthly basis, it usually makes sense to create a monthly budget, but you can shape it around whatever works best for you.


Using the monthly basis as an example, first determine what the total expected income is. Include all income from anyone at home whose earnings go toward paying routine expenses. Then lay out all fixed costs such as rent/mortgage, car payments, insurance, cable, and internet, etc.


Next, identify variable costs such as utility bills, gas, and groceries. While these do change based on current prices, weather conditions, and your own activity, you should be able to come up with some estimates based on recent months or long-term averages.


Once you’ve identified income and costs, you’ll know how to allocate your spending. Any positive difference between income and costs can become discretionary spending or savings. If you realize that your costs exceed your income, it’s obviously time to look at how to make changes that can rectify that.


Track Your Spending


A budget only works if you carefully track your spending. If your budget allocates $500 a month for groceries, but you don’t track your amounts whenever you go to the store, it’s easy to blow past that amount by spending impulsively, which makes it easy to blow a hole in your budget.


Track all of your spending, including little things that add up, such as running into a convenience store to get a soda or coffee when you stop to fill up on gas.


Avoid Overpaying for Things


Speaking of convenience stores, they’re a great way to overpay for things that are much cheaper at a grocery store. At a convenience store, you pay a premium for that convenience. The next time you’re at the grocery store, make a note of the cost of your favorite chips and then compare it to the price for the same chips at a convenience store. You probably already knew the latter was pricier, but you might be surprised to see how much pricier it really is.


Other ways to avoid overpaying for items are to shop around in advance for the best price, buy in bulk (that small bag of chips at the checkout stand is often only slightly cheaper than a much larger bag over in the aisles– again, convenience), but generic over the big-name brands, and to consolidate trips.


Also, shop smart. If something you want is on sale an hour’s drive away, how much are you really saving after gas costs and the cost of your own time? If it’s a big-ticket item like a TV, it might be worth it, but for something less costly like a pair of jeans, you might not actually come out ahead in the end.


Avoid Impulse Spending


Along with overpaying and spending money you don’t have (next up), impulse spending is one of the most notorious bad spending habits. Just about everyone is guilty of it from time to time. Something catches your eye, or maybe you’re hungry and don’t want to wait until you get home to grab a snack. Maybe it’s an accessory for something else you’re purchasing but that you don’t really need.


The key to controlling impulse spending, which can be highly tempting and gratifying, is to get into the habit of performing a self-check. Go ahead and pick the item up and check it out and think about how nice it would be to have it, but then ask yourself if you really need it and how much use you’ll really get out of it. Also, is it worth the price?


Usually, the more you think about it, the less likely you are to buy it and the more likely you are to just buy what you went to the store to get in the first place.


Don’t Spend Money You Don’t Have


This is the third of the three really bad spending habits. Credit cards make this really easy to do, and a lot of people end up in financial trouble as a result.


With a credit card, you can purchase items you don’t actually have the money for, and you can walk out of the store with that shiny new toy without having laid out a cent from your own pocket. Then the bill comes due, and if that item put you over your budget, you’re now looking at cutting costs elsewhere or making partial payments. The latter costs you more because you have to pay interest as well. One of the worst traps people fall into is accumulating high credit card debt and then just paying the monthly minimum. It can take years and thousands of extra dollars to get out of that hole.


In addition to avoiding reckless credit card spending, creating and adhering to that budget is a way to keep yourself from spending money you don’t have.


Get “Lifestyle Spending” Under Control


What we’re referring to as “lifestyle spending” is spending on things that are fun or gratifying but not really necessary. One of the classic examples of this is people getting their daily Starbucks favorite or a bottle of soda from a convenience store. It might seem like just a few bucks that don’t really matter but do the math as it applies to following this habit over a month or a year.


By all means, treat yourself from time to time, but at the very least, budget for it. Even better, limit the frequency and budget for it.


Cook Your Own Meals


Dining out is fun and convenient, and it isn’t a bad thing to do, but the more frequently you do it, the more you’re overpaying for a basic necessity: food. At a restaurant, you’ll easily pay at least two or three times more for the same meal you could have prepared yourself, and your home-cooked meals will probably be healthier as well. Even fast-food meals aren’t that cheap anymore, and they’ve always been way less healthy.


This applies to your lunch break at work as well. It might be fun to go out for lunch with coworkers, but if you bring your own lunch from home most of the time, you’ll save a lot of money.


Pay in Cash Whenever You Can


There are always conflicting messages about whether it’s best to pay with cash, credit cards, or debit cards. However, there’s no doubt that if you pay in cash whenever you can, you’ll be less likely to overpay, to spend impulsively, or to buy things you don’t have the money for. When you literally can see your money being depleted, you’ll think more carefully about spending it.


Be Open About Your Financial Situation


Whether you’re part of a family or you’re living with roommates, everyone with a stake in household finances should be part of the discussion about resources, expenses, and responsibilities. Everyone should know what obligations and limitations exist. If you have kids, this is a great way to teach them financial responsibility ahead of their college and working years.


Seek Financial Help if You Start Getting Into Trouble


If you’re falling behind or are worried about it, or if you suddenly have unmanageable debt, there are professional financial advisers and debt coaches who can help you out. It’s always best to seek help early on before debts and stresses snowball and become overwhelming.


Bad Spending Habits


Avoiding bad spending habits is one of the best ways to achieve financial stability. With that comes a more comfortable and less stressful lifestyle for you and everyone you live with. If you practice the good spending habits we’ve covered here, you’ll be well on your way to reaching that goal.


Frequently Asked Questions


What Are Examples of Bad Spending Habits?


There are a lot of bad spending habits, but the most prevalent and the most harmful, and which are the basis for many of the others, are not budgeting and tracking your money, overpaying for things, buying impulsively, and buying things you don’t actually have the money for.


How Do You Control Your Spending Habits?


First, make a budget and keep track of all income and expenses. Avoid buying things you haven’t budgeted for, save money whenever you can by eating at home, bringing your lunch to work, consolidating trips to spend less on gas, etc.


How Can You Fix Bad Spending Habits?


Go over our list and descriptions of bad spending habits and how to avoid them. If you realize that you’re guilty of one or more of them, apply the advice we’ve shared so that you get your finances under better control. For example, do you stop frequently at convenience stores or get takeout on the way home from work? Those expenses add up quickly and can take a big bite out of your budget; reducing or eliminating them can save a lot of money.



Hi! I am a millennial mom with a passion for personal finance. I have always been “into” personal finance but got inspired to start my blog after a period of extended unemployment. That experience really changed the way I viewed my relationship with money and the importance of accessible personal finance education.