Bad Money Habits That You Should Quit Right Now

The first step to making good money habits, like brushing your teeth or getting enough sleep, is to get rid of the bad ones.

One of the best ways to start is to figure out what bad money habits you have and make a plan to stop them.

Below are some of the most common bad money habits and how to break them.

Not Having A Clear Savings Plan

Setting specific goals for your savings is important not only so you know how much you need to save, but also so you have a real reason to save.

If you don’t have specific savings goals, you might not be thinking about how much you should save and what strategies to use to reach those goals. Getting rid of this habit will help you start saving money in other ways, and it’s a simple place to start.

Take some time right now to write down your goals, both short-term ones like a trip or a down payment on a house and long-term ones like retiring. You’ll need to include these goals in your budget and set a date for when you want to be done.

Spending Too Much On Things You Don’t Need

There are a lot of ways we might spend money on things we don’t need that add up over a month. Then, before you know it, you’ve already spent a lot more on these things you don’t really need than you planned.

If you often look at things from the outside, try this to break the habit: Next time you want to buy something that isn’t necessary, write it down on paper or in the notes app on your phone and wait a few days before buying it. After that time, you might not want the item anymore, and you can save the money you would have spent on it.

Also, try making a list of things you need to buy before you go shopping.

Taking On Too Much Debt

According to data from Experian, the average American will have $96,371 in debt as of September 2022. Consumers are used to taking on a lot of debt and then trying to pay it off slowly over time.

Some of the things that might add to your overall debt are personal loan debt, student loan debt, and credit card debt. If you let these balances build up and only pay the minimum each month, you’ll pay more in interest over time and be able to get out of debt and save more slowly.

To get out of debt, you should first make a list of everything you owe, along with the interest rates and due dates for each debt. Then you can start making a plan to find more money in your budget so you can pay off those debts.

The avalanche method says to pay off the ones with the highest interest rates first. The snowball method says to pay off the ones with the smallest balances first.

Not Having A Budget In Place

Without a budget, you can’t keep track of your spending, your savings goals, or how much money you have to spend. A budget is a simple plan for how you spend your own money. Without one, it’s easier to get into bad spending habits.

When making a budget, make sure to take wants, needs, and savings into account. The 50/30/20 rule is a common way to make a budget. It says that you should spend 50% of your income on needs, 30% on wants, and 20% on savings.

Read more: Take a look at these budgeting apps…

Putting Off Saving Until After You’ve Already Spent All Or Most Of Your Paycheck

Even if you have a budget, it’s easy to forget to save and spend more than you planned. Putting money into your savings account at the end of the month after you’ve spent it on wants and needs is a common bad savings habit.

To stop doing this, put your share of the savings in a savings account as soon as the paycheck comes in. Most savings accounts only let you do a certain number of transactions each month. This makes you less likely to break into your savings and spend the money you’ve saved.

Not Having An Emergency Fund

Many people may not have an emergency fund at all or have put other savings goals ahead of their emergency fund, leaving it with little money.

Even though inflation makes budgets tight, it’s still important to put some money away for emergencies. These savings help make sure you can pay for unexpected costs and keep you from taking on more debt by using a credit card or loan to pay for them.

To start putting money away for emergencies, look at your budget and see where you can make small changes to save more. You should also save any extra money you get (such as a tax refund).

Getting Cash Advances Too Often

Some people need cash advances to make ends meet, but using them too often can lead to a never-ending cycle of debt. Cash advances could be early payday loans, protection against overdrafts, or services that let you buy now and pay later (BNPL).

All of them have one thing in common: they let you spend money you don’t have right now.

Cash advances can make you feel like you’re spending free money, but you have to pay them back eventually. If you can’t, you could end up with more debt and stress about your finances. They often have expensive fees as well.

Instead of getting cash advances, think of other ways you can pay for things.

Not Taking Into Account Savings Account Rates

You might not realize how much savings account interest rates change, but the difference between the lowest and highest rates has been getting bigger and bigger.

Some of the best-yielding accounts today have annual percentage yields (APYs) of almost 4%, while many big, traditional banks still only offer APYs of 0.1% on their savings accounts.

Also, if you have more than one savings account, paying attention to how their savings rates differ can help you decide where to put more of your money to get the most out of your savings.

Read more: See the best Savings rates here…

Not Strictly Using In-Network ATMs

ATM fees, which include out-of-network fees and surcharges from your bank, are one of the most common types of bank fees that people have to pay.

Fees can add up quickly if you don’t pay attention to them. Say you use an ATM outside of your network twice a month to get cash. At the average fee, that would add up to more than $100 in ATM fees over the course of a year.

You can avoid these fees by not using ATMs that are not part of your network. More and more checking accounts are offering ATM fee reimbursements (see several here).

READ MORE: SEE THE BEST BANK BONUSES HERE AND THE BEST INVESTING BONUSES HERE.