5 Ways to Break Your Bad Money Habits

Your money habits, good and bad, are what helps you realize your financial goals — or holds you back from them. If you’re finding that there’s too much …

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Your money habits, good and bad, are what helps you realize your financial goals — or holds you back from them. If you’re finding that there’s too much month at the end of your money, and especially if you’re living paycheck to paycheck when your paychecks should be bigger than that, you might have bad money habits. To reign in your spending and get closer to realizing your financial goals, you need to break them.

It’s not always easy to break bad habits, especially not enjoyable ones like eating out and shopping sales. But breaking your bad financial habits could save you thousands of dollars that you could put towards retirement, invest in real estate, or save for a rainy day. The fact that you could invest the money instead makes losing it to bad spending habits even more costly. Here’s how to take control of your spending and break your bad money habits.

1) Address Your Bad Spending Habits One at a Time

You likely make bad money decisions in a constellation of ways as you move through life. Even people who are generally good with money do things like eating out too often, drinking a little too much, smoking cigarettes, making impulse purchases, or carrying a balance on a credit card. No one is perfect.

But if you’re trying to at least make fewer bad decisions by eliminating some of your bad money habits, you can start by making a list of your bad spending habits and focusing on improving them one at a time. This way, you won’t get overwhelmed by the enormity of seemingly becoming a different person, spendthrift-wise, overnight.

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2) Make a Budget and Stick to It

A budget is a valuable tool to help you break away from a life ruled by bad spending habits. Use an online money management tool to create a monthly budget so you can get a clear picture of what your finances look like — expenses, debt, savings, and disposable income. Developing a budget makes it easier to prioritize your spending to accommodate for retirement savings and other financial goals. When you know you’re saving for a new car or a family vacation, it makes it that much easier to say no to the morning mochachino.

3) Let Yourself Have Some Fun Money

Just like you’ll never be able to stick to a diet if you’re not allowed a cheat day, you’ll never be able to stick to a budget if you’re not allowed to spend a little mad money. Don’t cut all the fun out of your budget — enjoying life is just as necessary as eating food and paying the power bill. As long as you’re paying your bills, paying off debt or staying out of debt, and setting aside enough in your savings and retirement to meet your goals, you’re allowed to spend some of your money on things you enjoy.

4) Put Away the Credit Cards

Credit card debt is a huge problem in the U.S., with Americans carrying more than $1 trillion in credit card debt as of January 2020. The high interest rates on credit cards makes them hard to pay off, so if you have a problem with credit card spending, it’s best to put the cards away altogether. Only use cards if you can pay them off in full every month — and even then, only if you’re using a card that offers cash back, airline miles, or other rewards that make using one worth it.

5) Cultivate Gratitude

It might sound a little weird, but cultivating gratitude can help you curb your spending, because it can help you be satisfied with what you already have. If you’re grateful for the things you’ve got, you’ll be less likely to want to buy more things. You’ll begin to feel more satisfied with your life, so you’ll no longer need the endorphin rush of spending money. You’ll start to understand what really makes you happy — and it isn’t buying stuff.

Bad spending habits can quickly derail even the most well-laid financial plans. Don’t let them. Work on your bad spending habits, and watch your savings grow as you develop more financial responsibility.


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