Personal Improvement

7 Bad Money Habits You Need to Break Right Now

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bad money habits

I’ve had a lot of bad habits including, smoking, drinking, and never flossing, but most of my bad habits were money-related. The following bad money habits were either habits I’ve had and broke, or habits I’m aware of that still need to be broken.

If you currently practice any of these bad habits, you should make it a goal to stop them. The best bad habit killing/good habit forming app is Lift (which you can download for both iPhone and Android — there’s even a web-app). I suggest you use this app to break these habits.

1. Not Paying Off Your Credit Card Debt Every Month

I once was an impulse buyer who was suddenly gifted with a credit card at 18 years old with a $500 limit that was quickly spent in a the span of 2 weeks. I then waited over 6 months to start paying it off, because at that time, I had no idea how to use a credit card. Boo me.

Nowadays, I do whatever it takes to pay my credit card debt in full every month. I practice this by asking myself, “do you have enough cash in the bank to purchase this item or service with a debit card?” If I answer yes to myself, then I will use my credit card to buy it. That way, I rack up points or cash back bonuses. Then, at the end of the month, I use the cash I had to pay off that debt.

2. Not Saving Money with a Goal

I have never been a saver, but now I am. I started by creating a goal of having $2,000 in an emergency fund, which is something I suggest everyone has in case of…well, emergencies. This is an account I hope I never have to touch, but I’ll use it if something happens with my car, or a hospital bill, or something completely unexpected.

Saving in and of itself is not a bad habit at all, it’s doing it with no goal in mind. If you’re goal is just to have a lot of money, you really aren’t saving for anything, and in that case, just invest it for retirement (which is a goal).

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3. Not Investing

I’m still not an investor, but in 2014, I’ve made it my New Year’s resolution to start investing using Betterment. I’m simply going to invest for retirement. I will try to take 10% of all my earnings and invest it.

Investing is critical if you want to build wealth — it’s how the rich get richer.

If you have a fear of investing because you’re afraid you might lose it all, that’s irrational. As long as you invest wisely and diversify, you will have nothing to worry about. Instead, you can sit back and watch your money grow without you having to do a thing!

4. Not Diversifying

I’ve made this mistake too. I invested everything I had into one stock, and lost a shitload of money in the process. I put all my eggs into one basket, and suffered for it. This is why you should bet everything on black.

If you decide to use Betterment, diversification is built into the software. Your money is spread across multiple investments, including stocks and bonds.

If you have a regular brokerage account, and would like to manage everything yourself, you can’t go wrong with investing in a fund, which is group of stocks and bonds. Buying one fund is diversifying. However, you can create your own by buying a mixture of stocks and bonds that appeal to you.

Whichever you decide, make sure you diversify.

5. Compulsive Spending

I’ve been guilty of this my whole life, but one simple technique has helped me to break this habit.

Whenever I really want something, I write it on a list that I keep on my iPhone. I then wait 30 days or more, and check it to see if I still want or need it. If I do, I’ll buy it. If not, I’ll delete it.

In the past I would say, “aw man this is so cool,” and buy it without looking to see how much money I had or if I really could live without it. Now, I simply wait. Turns out I don’t need a lot of the dumb shit I thought was cool or useful when I first saw it.

6. Paying Bank Fees

This one drive me nuts!!! Banks make money off the money you deposit with them, so there is no need for you to pay your bank more money. They will make money if they never charged bank fees again, and there are plenty of banks now that don’t charge any fees. So if you’re still with a bank that penalizes you, you need to consider another bank.

One year I paid close to $200 in overdraft fees because I was an idiot. You should avoid regardless if you bank penalizes you or not, but paying that much is crazy.

ATM fees are another thing you need to avoid. Again, there are banks that waive these fees and ATMs that do too. Look into switching banks if you’re regularly being charged for taking your own money out. It’s simply ludicrous.

I recently switched from PNC to Simple for this very reason, and you can read about it here. We also recorded a whole podcast episode dedicated to getting rid of bank fees, which you can listen to here.

7. Keeping Active Subscription Services That You Don’t Use

I used to subscribe to a bunch of services and products, and it was often the cause of why I would overdraw my account.

If you don’t use your gym membership, cancel it. If you don’t watch Hulu often enough, cancel that too. Take inventory of all your subscriptions that are regularly withdrawing money from your account and cut a few of them out if you can.

On the same note, have you tried giving up cable? I suggest you take our 30 day challenge to living without cable.

Do You Have Any Bad Money Habits?

To become a money management master, you need to develop good habits. I’ve been ridding myself of these habits and creating good habits in their place for the past year. For instance, I wake up every morning and check my Mint account to see where I stand financially every day, and to make sure nothing fishy is going on. I’ve found so many bank errors and spending flaws by doing this. It also helps you to know what’s going on with your money at all times. It’s a good habit.

If you have any good or bad money habits you’d like to talk about, tell us in the comments below.

(photo by

Matt Giovanisci - Podcast Co-Host
Hey, I’m Matt (Gio), a swimming pool and coffee blogger. I used to be terrible with money until Andrew helped me out. Now, I'm a financial big whig... sort of.

I live South Jersey (actually, I just refer to it as Philadelphia). Follow me on Twitter and we can chat about pools, beer or internet marketing.

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