Money habits that keep you poor

Money habits that keep you poor

This article examines 15 money habits that keep you poor. Are you scratching your head trying to figure out where all your money has gone? You get paid on the 1^st day of the month, and there is no money left in your account by the 15^th of the month.  Do you find yourself stuck in the same financial position year after year? If so, you have landed on the right page.

Money is an essential part of life, and the way we manage our finances can have a significant impact on our quality of life. Unfortunately, there are many money habits that can keep us away from building wealth and achieving our financial goals. In this article, we will look at how some money habits keep us poor, and how to avoid them. We will also discuss the importance of financial literacy and developing our own money habits.

Factors behind the money habits that keep you poor

Money habits that keep us poor can be influenced by a variety of factors. For some people, it can be a lack of financial knowledge or education. For others, it can be an unwillingness to change their behavior or attitude towards money. It can also be due to a lack of resources or a lack of motivation to build wealth.

It is important to understand why money habits that keep us poor exist so that we can address them duly. Once we are aware of them, we can then begin to make changes and develop new habits that should help us achieve financial success.

List of 15 money habits that keep you poor

1. Not budgeting or making a financial plan

One of the main habits that keep us poor is not budgeting or making a financial plan. Without a plan, it is easy to overspend and make poor financial decisions.

Creating and following a budget allows us to track our spending, set goals, and plan for the future. A budget should also include a plan for paying off debt and setting aside money for savings and investments.

2. Spending beyond our means or using credit cards excessively

Another common money habit that keeps us poor is spending beyond our means or using credit cards excessively. This can quickly lead to debt and an inability to pay off what is owed.

To avoid this, it is important to be aware of our spending and only buy what we can afford. Additionally, we should limit our use of credit cards and always pay off the balance in full each month.

White (2023) reports that there are 8 common credit card fees that we should be aware of. They are annual fee, interest charges, late payment fee, foreign transaction fee, balance transfer fee, cash advance fee, over-the-limit fee, and returned payment fee. While a credit card can be useful in difficult times, it can also be very costly.

3. Not saving or investing for the future

Why don’t we save for the future? Saving money is very important especially when it comes to retirement. Not setting aside money for retirement can put us in a difficult financial situation. To avoid this, it is important to start saving and investing early and to make regular contributions to our retirement plans.

However, saving money is not easy for everyone. In the UK, 34% of adults have either no savings, or less than £1000, in a savings account. Having said that, the positive information is that 61% of adults save money either every, or most months (O’Brien, 2023).

Many Americans have barely any savings. Shockingly and sadly 56% of them would not be able to cover an unexpected $1,000 bill using their savings (Wolfson, 2022). Therefore, the writer suggests that we should be saving about 20% of our income each month.

Regarding investment, it should be mentioned that any investment is associated with risks. Benzinga (2021) reports that 70% of forex traders lose money every quarter on average. Therefore, it is very important to analyse risks, and carry out costs and benefits analysis before making any investment decisions.

4. Not keeping track of our finances or relying on someone else to manage our money

Another habit that can keep us from reaching our financial goals is not keeping track of our finances or relying on someone else to manage our money. It is important to stay on top of our finances and understand where our money is going. It is also important to take responsibility for our finances and not rely on someone else to manage them for us.

5. Letting our emotions dictate our financial decisions

It is easy to let our emotions dictate our financial decisions, especially when it comes to investing. It is therefore important to take a rational approach to investing and any other financial dealings.

Some people make financial decisions emotionally. This is not helpful as adequate analysis is required before any decisions are made. It is important to understand the risks associated with any investment and we need to ensure that we are comfortable with them before investing.

6. Not having an emergency fund

Not having an emergency fund is another money habit that can keep us poor. Unexpected expenses can quickly put us in a difficult financial situation.

An emergency fund can help us alleviate some of the financial stress. It is important to set aside some money each month to build an emergency fund that could help us cover at least three to six months of expenses.

7. Not researching or comparing prices before making a purchase

It is important to research and compare prices in order to get the best value for our money. Additionally, it is important to look for discounts and other deals that can help us save money.

There are many companies that can help us compare prices. Confused.com, GoCompare, MoneySuperMarket, Quotezone, Uswitch, idealo, Kelkoo, PriceRunner, Price Spy, Comparethemarket, Yahoo Shopping, PriceGrabber, Shopping.com, Shopzilla, Become, ShopSavvy, and Getprice are some of the popular ones.

8. Not considering the long-term cost of purchases

When making a purchase, it is important to consider the long-term cost. Many purchases have ongoing costs that can add up over time, such as insurance, taxes, or maintenance. It is therefore important to consider these costs before making a purchase.

9. Not negotiating for better terms or rates

Negotiating for better terms or rates is another money habit that can help us get the best value for our money. When making a purchase or taking out a loan, it is very important to negotiate for the best terms and rates in order to save money.

10. Not consolidating debt or refinancing loans

Consolidating debt and refinancing loans are two money habits that can help us save money in the long run. It can help us reduce monthly payments and interest rates. However, many people do not consider this option, or even do not know about it.

11. Not taking advantage of free financial advice

There are a number of free resources available to help us improve your financial situation. It is important to take advantage of these resources and seek out professional advice when necessary. Not taking advantage of free financial advice is another money habit that can keep us poor.

12. Not avoiding hoarding

Hoarding is an unhealthy habit that can prevent us from reaching our financial goals. It is where people acquire an excessive number of items and store them in a messy manner. Some people keep on buying stuff that they do not need. It can cost them lots of money.

Hoarding can lead to an inability to manage our finances and make informed decisions. It is important to identify any hoarding tendencies and take steps to manage them in order to improve our financial situation. It is also important to talk to a professional if we cannot resolve our hoarding disorder.

13. Paying late fees regularly

Paying late fees is another bad money habit that can keep us poor. It is important to pay bills on time in order to avoid late fees. Additionally, it is important to set up automatic payments or reminders to ensure that the bills are paid on time.

14. Not taking advantage of bulk purchasing

Instead of going to shops everyday or every other day, it is better to do weekly or even monthly shopping. This can help us take advantage of bulk purchasing. Buying bulk items is cheaper than buying individual items. 

15. Prioritising the wrong things

Prioritising the wrongs things is also a habit that can impact on our finances. Buying food is a necessity; however, watching games in a stadium is not. If we are experiencing financial challenges, we really need to cut down on things that are not necessary.

Tips to avoid the 15 money habits that keep you poor

Now that we have discussed the 15 money habits that keep you poor, let us take a look at some tips to help us avoid them.

• Track your spending and create a budget
• Save and invest for the future
• Research and compare prices before making a purchase
• Consider the long-term cost of purchases
• Shop around for the best interest rates or fees
• Take advantage of bulk purchasing and other discounts
• Take advantage of rewards programs
• Use coupons or other money-saving strategies
• Negotiate for better terms or rates
• Understand and consider the risks associated with investments
• Diversify investments
• Take full advantage of employer-sponsored retirement plans
• Take advantage of employer-sponsored benefits
• Set financial goals and track progress
• Take advantage of free financial resources
• Consolidate debt or refinance loans
• Take advantage of free financial advice

Developing your own money habits

Once you are aware of your money habits that keep you poor, you can then begin to make changes and develop new habits that should help you achieve financial success. This may include tracking your spending, creating a budget, saving and investing for the future, and taking advantage of financial opportunities.

It is important to develop your own money habits and find strategies that work for you. This can help you reach your financial goals and achieve financial independence, and success.

Importance of financial literacy

Financial literacy is the knowledge and understanding of financial concepts and how to effectively manage one’s finances. It is important to be financially literate in order to make informed financial decisions and reach our financial goals.

Financial literacy can help us avoid money habits that keep us poor and make better financial decisions. It can also help us develop our own money habits and strategies that will help us achieve financial success.

Summary of money habits that keep you poor

It is no secret that our money habits can have a major impact on our financial health. Whether it is managing our current finances effectively or building wealth over time, the decisions we make today will have a lasting impact on our financial future. Unfortunately, many of us have fallen into bad money habits that keep us from reaching our financial goals.

Whether it is due to a lack of financial literacy, lack of motivation, or behaviour, it is important to identify bad money habits and make changes where necessary. By understanding those habits, we can start making changes today that will put us on the path to financial success.

We hope this article has helped you better understand the money habits that keep you poor and how to avoid them. Please share the article link on social networking sites to help our academic work. You may also like reading the following articles:

Advantages and disadvantages of owning a home

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Last update: 15 February 2023

Reference list:

Benzinga (2021) If You’re Day Trading, You Will Probably Lose Money: Here’s Why, available at: https://markets.businessinsider.com/news/stocks/if-you-re-day-trading-you-will-probably-lose-money-here-s-why-1030667770 (accessed 14 February 2023)

O’Brien, L. (2023) UK Saving statistics, available at: https://www.money.co.uk/savings-accounts/savings-statistics (accessed 15 February 2023)

White, A. (2023) 8 common credit card fees and how to avoid them, available at: https://www.cnbc.com/select/how-to-avoid-common-credit-card-fees/ (accessed 15 February 2023)

Wolfson, A. (2022) How much should I save each month? Available at: https://www.marketwatch.com/picks/heres-exactly-how-much-americans-at-every-age-have-actually-saved-and-what-they-should-be-saving-01665586734 (accessed 10 February 2023)

Author: M Rahman

M Rahman writes extensively online and offline with an emphasis on business management, marketing, and tourism. He is a lecturer in Management and Marketing. He holds an MSc in Tourism & Hospitality from the University of Sunderland. Also, graduated from Leeds Metropolitan University with a BA in Business & Management Studies and completed a DTLLS (Diploma in Teaching in the Life-Long Learning Sector) from London South Bank University.