10 Sneaky Habits That Are Keeping You Broke
These bad habits are sneaky. No one will tell you that you need to make a change. You’ll realize it too late, full of regrets for what could have been.
Instead, fix these now! Be honest with yourself now and you’ll be so happy you did.
You can only make a change if you are aware that you need to.
1. Not Having an Emergency Fund
If you don’t have money to fall back on, one little slip is all it takes to put you behind for years.
Instead, give yourself a money shield. It’s a strategic buffer with at least three to six months’ worth of living expenses. Without it, unexpected events like a car repair or medical bill can plunge you into debt.
2. Ignoring Small Purchases
Next, you don’t have to give up your Starbucks latte. But you do need to realize how much it’s costing. And be honest about whether you’re happy with that number.
Small purchases add up to more than most people realize. For example:
- Daily Coffee: Just a $5 daily coffee adds up to around $150 a month.
- Lunch Out: Eating lunch out could cost you upwards of $200 monthly.
These are often silent culprits behind your shrinking wallet.
3. Overlooking Recurring Payments
Subscriptions are the sneakiest things in today’s economy. It’s great for businesses because users forget to cancel. But it’s terrible for consumers trying to be smart with their money.
Here are the two big things to watch out for:
- Subscriptions: Services like streaming or gyms can drain funds if you’re not using them.
- Automatic Renewals: Often set to renew without notice, they can quietly eat away at your bank account.
Review these recurring payments regularly to ensure you’re not paying for things you no longer need.
4. Paying Only the Minimum on Your Credit Card
Paying only the minimum due on your credit card might seem like a temporary relief for your wallet. But it’s a move that costs you more over time.
Interest adds up, turning what was once a small purchase into a growing expense. (Suddenly that Starbucks latte costs a whopping $25!)
Make it a priority to pay the full balance, or at least well above the minimum.
5. Accumulating Credit Card Debt
The convenience of credit cards can lead to charging more than you can afford. This results in a cycle of accumulating debt. Keep an eye on your balance to ensure that you are living within your means.
Also, prioritize paying off higher-interest cards first to minimize the financial impact.
6. Failing to Budget & Monitor
Budgeting is fundamental to managing your finances. Without a detailed budget, you may not realize how much you’re overspending. By tracking your income and expenses, you can ensure you’re not spending money you don’t have!
List for a Basic Budget:
- Income Sources
- Fixed Expenses (rent, utilities)
- Variable Expenses (groceries, entertainment)
Pro Tip: Have a Monthly Budget Check-In: During this time, track your spending and compare it to your budget. It’s also a great opportunity to check in on your savings goals and realign.
7. Impulse Shopping
Impulse Shopping is a deceptive habit that causes a massive dent in your financial health.
Small, spontaneous purchases may seem harmless. But they add up quickly and can sabotage your financial goals.
Tips to Avoid Impulse Shopping:
- Make a shopping list and stick to it.
- Wait for 24-48 hours before making a non-essential purchase.
- Unsubscribe from marketing emails to reduce temptation.
- Make a list of your needs vs wants to better understand your priorities.
Be aware that supermarkets and online stores deploy strategies to keep you browsing longer. Such as:
- placing items at eye level
- or advertising sales that aren’t actually sales (i.e. they marked the original price up)
Tactics like these capitalize on the shoppers’ psychological triggers, prompting purchases that seem like a bargain. Use shopping lists and apps to compare prices to avoid these traps.
“Buy one, get one free” is not a deal if you didn’t need the first item to begin with!
8. Putting Off Retirement Planning
Thinking about retirement should happen many decades BEFORE your golden years.
Starting your retirement savings early can mean the difference between living comfortably in your later years and struggling financially. The power of compound interest means that even small, consistent contributions to a retirement account like a 401(k) or an IRA can grow significantly over time.
So start now!
9. Lacking Financial Goals
Busyness and distraction make it easier than ever for people to go through life without considering what they truly want.
What do you want to:
- BE?
- DO?
- HAVE?
This is your one and only life. You’ll blink and find that your life has passed you by. Give thought to what sets your soul on fire now. And then take the steps to go for it.
To do this, you need clear financial goals. Goals act as a roadmap for your finances, ensuring you are working towards something tangible.
Short-Term Savings Goals
Start by identifying a small, achievable savings target. For instance, aim to have $1,000 saved for emergencies.
Long-Term Investment Strategy
Set up a retirement plan or save for your dream home now. And break it into monthly amounts and steps.
Or consider speaking with a financial advisor to help you formulate a plan that could include stocks, bonds, or retirement accounts.
10. Ignoring Financial Education
Finally, learning financial literacy is crucial. Make it a goal to
- read at least one financial book or article every month
- sign up for the Wealthy Woman Finance Newsletter
- or listen to a financial podcast.
Over time, you’ll learn key strategies to build savings, grow investments, and reduce your debts.
This continuous learning allows you to be flexible and incorporate new, effective strategies into your financial plan.
What’s Next?
It can be easy to become complacent and miss out on opportunities to improve. But these sneaky habits happen to all of us at one time or another. What’s important is that you recognize them and take the steps needed to get back on track.
Next, become a part of the Wealthy Woman community, receive my best tips for wealth-building, and have instant access to the free resource library. Start now!
