5 Bad Financial Habits You Should Stop Today

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By guest writer Brooke Chaplan

The secret to financial success isn’t just the amount of money you make, but rather your own financial literacy. Knowing how much you’re bringing in versus how much you’re spending, where you’re investing and building assets are important places to start your financial journey. You should also be aware of where you’re wasting money, and where you might have unchecked spending.

It’s just as possible to pay off a $15,000 loan on an income of $45,000 in one year, as it is to find yourself living paycheck to paycheck on a $100,000 salary. The difference between the two scenarios is financial awareness and responsibility, and the best way to achieve both is to create a budget and stick to it. The specifics of any budget, of course, is dependent upon the circumstances of the individual, but there are a few universal bad habits that can dramatically improve financial stability once they’re identified and stopped.

1. Frequent Dining Out

Americans on average buy lunch twice a week, spending almost $1,000 annually. In total, Americans spent an average of $2,625 dining out in 2013, the last year for which data is available, according to the Bureau of Labor Statistics. That’s enough to completely fund a vacation. Taking these numbers one step further, the money spent on dining out surpassed that spent on groceries for the first time in March of 2015, according to a report released by the Commerce Department. So despite your long working long hours, your social engagements, and your disposable income, try to add at least $1,000 to your savings by dining out less.

2 . Fees and Interest

The two big leeches on any budget are bank fees and the interest paid on credit cards. ATM fees alone bring in $7 billion to banks annually, while interest on credit cards cost Americans almost $50 billion a year. This adds up to the $32 billion spent annually on overdraft fees. Bank fees are the easiest to avoid, especially ATM fees. As we all know, both our bank and the competitor charge a fee when you use an ATM. If you need cash quickly, you may accept the fees, but the convenience doesn’t outweigh the expense. Therefore, having a proper budget and planning your expenses in advance can help you avoid all those fees, and get trapped in the endless minimum-payment-cycle of credit cards. Read this article for budget tips to pay off  your debts faster.

3. Shopping Sprees and Emotional Purchases

Going to a mall and blowing all your money on everything you can get your hands on, is one of the worst financial behaviours people have. Keep in mind that every store is designed to encourage impulsive purchases. It goes from the candies at the checkout line, to the extra points you get on your fidelity card for items you don’t need. To avoid this issue, make a point of writing a list before heading to a store. If it’s not on the list, it shouldn’t be in your cart.

4. No Emergency Fund

A visit to the dentist, a prescription not covered by insurance, or brake work on your car, these are examples of sudden expenses that can’t be avoided, even when you don’t have the money for it. Sixty-two percent of Americans don’t have cash on hand to cover these expenses, leading to maxed out credit cards, or an over-reliance on loans. Keep in mind that emergency funds should have enough to cover living expenses for at least three months, but preferably six.

5. Negative Cash Flow

People living paycheck to paycheck suffer from a negative cash flow. In the case of low income, expenses may be higher than the money coming in, but it can also be that you’re losing money every month due to financial irresponsibility. To fight this situation, break down your net income, bills, and other necessary expenses — including a figure for emergencies — to determine if your negative cash flow is the result of a low income. If it’s not, print out your last three bank statements and highlight and calculate all the random and unnecessary purchases you’ve made during that time. You’ll be surprised at how much you can save just by paying attention to your finances.

Financial literacy starts with awareness. If you’re not paying attention to where your money is going, you’ll find yourself always short on funds. Creating a budget will help even the most helpless cases gain control of their finances. But, as with anything, the first step is breaking the bad financial habits.

Did this help? Your opinion matters. You can rate this article, leave a comment below or share it on social media. Follow Bobbyfinance for more financial tips.


  1. Jack Vogt

    January 24, 2017 at 2:28 am

    Great article, Meinna! Your #2 and #3 are such a large component to financial strain. One of the best ways to break poor financial habits is learning to appreciate what you already have and simplifying. Appreciation of simplicity and a less is more or quality over quantity approach to purchasing really changes the way we spend and ultimately our financial health.

    • Meinna Gwet

      August 25, 2017 at 12:25 am

      Jack, I’m really glad you liked the post. Thanks a lot for your comment!

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