Bad Financial Habits and How to Break Them

We’re all creatures of habit. Sometimes our financial habits support us, sometimes they don’t. You can be sure of one thing though, at some point in your life, these habits, both good and bad began as a conscious choice.

There’s no need to continue to be a slave to your bad habits. You can change. And, if you’re serious about getting out of debt or investing for a comfortable (or early) retirement, you need to deal with your bad financial habits now.

Too often we believe we need to go cold turkey to break our bad financial habits. Denial and deprivation require sacrifice and hard work. Rarely can we keep up that kind of effort for more than a week or two. And, before you know it, those bad financial habits are sneaking back into your life. It’s time to think about your bad financial habits from a different perspective.

bad financial habits and how to change themPin

Bad Financial Habits

How many of these bad financial habits are undermining your financial well-being? Are you ready to kick them to the kerb?


  • Impulse spending
  • Spending on credit cards for the points
  • Keeping up with the Joneses
  • Retail therapy
  • Lifestyle inflation
  • Spending more than you earn
  • Spending money as soon as you get it
  • Spending on little things.

Sometimes we’re completely unaware of how we’re frittering away our money on a daily basis. We might notice the big things: buying a new car because everyone else has one (AKA – keeping up with the Joneses) but what about the cash that seemingly evaporates in your wallet? The best way to catch bad spending habits is to track your spending. Keep a notebook handy or download a spending tracker app (like this one) to your smart phone and record every, single, purchase. No matter how small. Including the 50 cents you put in the charity collection box at the grocery store.

Spending patterns will emerge pretty quickly. Once you know what you’re spending money on and how much, you can begin to look at ways to avoid the spending or trick yourself into not spending. Getting your spending under control is an important first step in changing your financial habits and improving your financial well-being.

If you haven’t already done so, organize a budget. It’s the kindest thing you can do for yourself and your family. A budget is the map by which you’ll navigate your way to financial security, if not independence.


  • Paying bills late
  • Ignoring your bills
  • Losing paper bills.

Bills. They’re a necessary evil but it’s hard to bring yourself to be grateful for them. Too often we focus on the money going out not the value coming in. We resent handing over our hard earned money, especially when money is tight. What we need to remember this is that, generally, we’re billed after receiving the service (like water or power). If you’re caught up in resenting your bills you’re likely to treat them accordingly; ignore them, pay them late or lose them. It might seem a bit out there but one way to change your mindset on your bills is to practice gratitude. When you receive your bills, acknowledge the value you’ve received and promise yourself you’ll honour that by paying the bill on time. Then, automate the heck out of your regular bills.


  • Out of sight, out of mind attitude
  • Taking interest-free loans for consumer goods (furniture, etc)
  • Paying the minimum repayment on loans and credit cards
  • No debt repayment plan
  • Using credit cards like free money
  • Getting hit with bank overdraft/over-drawn fees.

If any of the above sound familiar, it’s time to shake up your attitude to your debt and build some new financial habits. Too often we use credit by habit; it’s easier than saving cash. Or, like our bills, we try to pretend our debt doesn’t exist. Ignoring your debt is one of the worst financial habits to get into because debt is an anchor and it will stop you moving forward and achieving the best for your life.

The best way to shift your mindset around your debt is to create a sense of urgency. Set a deadline for paying it off. Work out a plan for achieving that goal. And, declare a state of financial emergency until it is done.


  • Failing to save
  • Expecting a miracle

Enough said. If you’re not actively saving, you’re indulging in a seriously bad financial habit. You don’t need to save a lot, although the more of your income you can save and invest, the better. You do need to save something. Even if you start with just a small amount or percentage of your income and make sure it’s put into a separate account every time you get paid, you’ll soon begin to accumulate a financial buffer. As Dave Ramsey suggests, start with baby steps and build on them over time.

If you don’t already have one, get your emergency fund started as a priority. Then, investigate other options for medium and long term (retirement) savings.

Breaking Bad Financial Habits

The simple truth is everyone has some sort of bad financial habit. None of us is ever going to be perfect. We all have our foibles. And, we all have something to learn. A new skill to master. A bad habit to break or a good one to start. Realising you’re still learning and giving yourself the grace to make mistakes is important. Recognising our bad financial habits puts us on the road to rectifying them, so don’t be afraid of what you might discover. Dig deep. Make changes wherever and whenever you can. You wont regret it.

What bad financial habits did you or do you need to break?

Image: Pixabay