Are These Bad Money Habits Making You Broke?

There has probably been at least one point in everyone’s life when they have engaged in a bad money habit. However, it’s best to realize your bad money habit now rather than later! I believe it’s much better to realize your problem as soon as you can so that you can take action towards changing…

Michelle Schroeder-Gardner

Last Updated: April 4, 2024

Disclosure: This post may contain affiliate links, meaning if you decide to make a purchase via my links, I may earn a commission at no additional cost to you. See my disclosure for more info.

Bad money habits can lead to debt, living paycheck to paycheck, unhappiness, and more. Here are several bad money habits that may be making you broke.There has probably been at least one point in everyone’s life when they have engaged in a bad money habit. However, it’s best to realize your bad money habit now rather than later!

I believe it’s much better to realize your problem as soon as you can so that you can take action towards changing for the better. Doing so can help you improve your financial situation for years to come.

Understanding your bad money habits and making a change can help you stop living paycheck to paycheck, eliminate debt, pursue your passion, save for your goals, reach retirement, and more.

Here are several bad money habits that may be making you broke.

Keeping up with the Joneses – what a bad money habit!

I’m sure almost everyone, at one point in their life, has felt the need to keep up with the Joneses.

Whether you are five years old and want that new toy everyone is playing with, or if you are 40 years old and are feeling the need to upgrade your house, car, etc., everyone has experienced it.

The problem with this is that keeping up with the Joneses can make you broke.

VERY broke.

When trying to keep up with the Joneses, you might spend money you do not have. You might put expenses on credit cards to (in a pretend world) “afford” things. You might buy things that you do not care about. The problems can go on and on.

This can lead to a significant amount of debt.

Keeping up with the Joneses is not worth it because:

  • You will never be happy, no matter how much money you spend.
  • You will constantly compare yourself to EVERYONE.
  • You will go into debt because that’s the only way you feel like you can keep up.
  • You will have a loan payment for everything because that’s the only way you can “afford” everything.
  • You won’t have any money leftover for retirement, an emergency fund, etc. because you’re spending it all on things you do not need.

Instead, you should figure out why you want to keep up with the Joneses, think about your own life and your own goals, realize that jealousy won’t get you anywhere, and try your best to live within your means.


Letting your emotions take control of your spending.

Emotional spending is a bad money habit that many people take part in. It’s one you should stop, because it doesn’t cure any problems.

According to NerdWallet, the average US household (who has debt) has an average credit card debt of $15,611, and I’m sure some of that is due to emotional spending.

Emotional spending occurs for many different reasons. You may have had a bad day at work, a fight with your loved one, and so on. You might even be spending because you are so stressed out about the amount of spending you have done.

To end your emotion spending habit, I recommend:

  • Figuring out the amount of debt you have. You’ll most likely be shocked, and hopefully this will persuade you to change your spending habits and the way you deal with stress.
  • Understanding why you spend when you’re stressed. In order to stop stress spending, you need to really think about why you have this problem. Without understanding your problem, you might just keep falling into the same cycle over and over again.
  • Thinking about your financial goals, so that you can stay motivated.
  • Finding different ways to deal with stress.
  • Sticking to a budget.

Not facing your debt.

Too many people never face their debt and don’t even know how much debt they have.

By not thinking about your total debt figure, it may seem less real and a way to run away from it. However, that will catch up to you in many ways, such as high interest charges, a bad credit score, numerous phone calls from debt collectors, possible paycheck garnishments, and more.

The first step to paying off your debt is to face it. You should add up your total debt, learn more about the debt you have, and create a plan to eliminate it.

Ignoring the importance of financial education.

Many people do not fully understand how credit cards work, how to improve their credit score, and more. However, if more people were educated on financial issues, this could lead to less debt, better managed budgets, and more.

I recommend diving into a good personal finance book, bookmarking your favorite financial blogs, staying up-to-date on the latest things going on in personal finance, and more.

Thinking you don’t need a budget.

Too many people go without a budget, because they believe they don’t need one. Sadly, many people believe that budgets are only for “poor” people, people who are horrible with money, and so on.

But, that just isn’t the case, at all. Nearly everyone needs some form of budget, even if that means just comparing your income and your expenses each month.

Budgets are great, because they keep you mindful of your income and expenses. With a budget, you will know exactly how much you can spend in a category each month, how much you have to work with, what spending areas need to be evaluated, among other things.

Budgets have helped people reach their goals, pay off debt, make more money, retire, and more.

Believing you’re invincible.

While I always try to stay positive and am a firm believer in the power of positive thinking, I do believe that everyone should have an emergency fund. However, many people have no emergency fund whatsoever, and this is a bad money habit.

There are many reasons to have an emergency fund:

  • An emergency fund can help you if you lose your job. No matter how stable you think your job is, there is always a chance that something could happen.
  • An emergency fund is wise if you do not have great health insurance or have a large annual deductible.
  • An emergency fund is a good idea if you have a car and need repairs.
  • An emergency fund is a need if you own a home. One of the lucky things that homeowners often get to deal with is an unexpected home repair. Having an emergency fund can help you if your basement floods, if a hole forms in your roof, and more.

Emergency funds are always good to have, because they give you peace of mind when something costly happens in your life. Instead of building onto your stress, you will know you can still afford to pay your bills and worry about more important things.

Being afraid of investing.

One of the biggest bad money habits is that far too many people are afraid of investing and never start.

Here are some reason to invest:

  • You can retire one day.
  • You never know what may happen in the future, so preparing now is important.
  • You can allow your money to grow over time.

I always say, the first thing you need to do if you want to start investing is to just jump in. You’ll never learn unless you make an attempt.

Read more at The 6 Steps To Take To Invest Your First Dollar – Yes, It’s Really This Easy!

If you are new to my blog, I am all about finding ways to make and save more money. Here are some of my favorite sites and products that may help you out:

  • Start a blog. Blogging is how I make a living and just a few years ago I never thought it would be possible. I earn over $70,000 a month online through my blog and you can read more about this in my monthly online income reports. You can create your own blog here with my easy-to-use tutorial. You can start your blog for as low as $3.49 per month plus you get a free domain if you sign-up through my tutorial.
  • Sign up for a website like Ebates where you can earn CASH BACK for just spending like how you normally would online. The service is free too! Plus, when you sign up through my link, you also receive a free $10 gift card bonus to Macys, Walmart, Target, or Kohls!
  • Answer surveys. Survey companies I recommend include Survey JunkieSwagbucksPinecone Research, and Harris Poll Online. They’re free to join and free to use! You get paid to answer surveys and to test products. It’s best to sign up for as many as you can as that way you can receive the most surveys and make the most money.
  • Save money on food. I recently joined $5 Meal Plan in order to help me eat at home more and cut my food spending. It’s only $5 a month (the first two weeks are free too) and you get meal plans sent straight to you along with the exact shopping list you need in order to create the meals. Each meal costs around $2 per person or less. This allows you to save time because you won’t have to meal plan anymore, and it will save you money as well!
  • Cut your TV bill. Cut your cable, satellite, etc. Even go as far to go without Netflix or Hulu as well. Buy a digital antenna (this is the one we have) and enjoy free TV for life.
  • Try InboxDollars. InboxDollars is an online rewards website I recommend. You can earn cash by taking surveys, playing games, shopping online, searching the web, redeeming grocery coupons, and more. Also, by signing up through my link, you will receive $5.00 for free just for signing up!
  • Find a part-time job. There are many part-time jobs that you may be able to find. You can find a job on sites such as Snagajob, Craigslist (yes, I’ve found a legitimate job through there before), Monster, and so on.
  • Lower your cell phone bill. Instead of paying the $150 or more that you spend on your cell phone bill, there are companies out there like Republic Wireless that offer cell phone service starting at $10. YES, I SAID $10! If you use my Republic Wireless affiliate link, you can change your life and start saving thousands of dollars a year on your cell phone service. I created a full review on Republic Wireless as well if you are interested in hearing more. I’ve been using them for over a year and they are great.

What bad money habits are making you broke?

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Michelle Schroeder-Gardner

Author: Michelle Schroeder-Gardner

Hey! I’m Michelle Schroeder-Gardner and I am the founder of Making Sense of Cents. I’m passionate about all things personal finance, side hustles, making extra money, and online businesses. I have been featured in major publications such as Forbes, CNBC, Time, and Business Insider. Learn more here.

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  1. Absolutely trth when I understood that was time to think about future well I was in debt for €3800, so I started to read financial blogs, understanding the importance to have a budget and stick it, avoid shopping temptation and compulsive shopping, have shopping ban period and after 3 years I am debt free, now I am focused on savings for retirement!!!

    1. Giulia, I completely know what you mean! I finally decided to take a good look at my finances and realized just how much money I’ve been spending on online shopping (my #1 guilty pleasure!)! And after that slap in the face, I’m now making myself go on a budget!

      Michelle, I have been trawling your blog for the last few days and am absolutely loving it. I’ve definitely thought about investing but it always felt like a Boys Club, your advice really helps bust through those myths! I’m starting on a budget next week which I’m totally nervous/excited about but with the help of your posts on budgeting I feel pretty good about it all!

      I have one quick question though, when you were budgeting – did you have to try hard not to fall into a “scarcity/can’t spend money/there’s not enough” mindset?

      Elise xo

  2. Mrs. CTC

    Haha thinking you’re invincible is definitely a big one! You always think that it’s only other people that lose their jobs or have other sorts of bad luck.

    We learned the hard way, and part of our reason for trying to become financially independent is that we don’t want to expose ourselves to that risk again. Or at least mitigate it as far as possible.

    Good tips!

  3. Great list. One thing that I think often leads to bad money habits is to allow yourself to be overwhelmed as an excuse to avoid action. That touches in a few different areas of the list, but essentially what it comes down to is that people know they have to make changes, but because they can’t even begin to know where to start, they end up doing nothing, which just allows the problem to continue.

    1. Oh yes, this is a great one. Too many people do this!

  4. Thankfully none of the above are keeping me broke. But trust me this wasn’t always the case. I’ve suffered from all of these bad money habits at one point and the actual feeling of being broke eventually got old. If someone is in that predicament, the only way change will come is if they want it bad enough. Great post, Michelle:)

  5. Great post. I’ve heard people say that they don’t make enough money to have a budget or that they make more than enough to pay their bills so they don’t need a budget. Budgets are for everyone!
    Our emergency fund gives me so much peace of mind. It took years to get it to where it’s at with our small income, but it was worth every sacrifice.

    1. Yes, budgets are definitely for everyone.

  6. Aliyyah @RichAndHappyBlog

    The last two are so on point! Having an emergency fund is crucial for keeping your finances in order and making sure than a large unexpected expense doesn’t put you in debt.

    As far as investing goes, it’s a great way to make your money grow faster than it would in a typical savings account.

    1. Yes, emergency funds are SO important!

  7. I love the part of being afraid to invest. It can be scary for those who are new to it. But when you think about it, most things that are new to us are scary. Learning to ride a bike is scary. Taking a new job is scary. But like you said, “you’ll never learn unless you make the attempt.”

    If you are willing to try things even when they are new and uncomfortable, you will be able to do great things.

    1. Yes, for sure. Thank you for stopping by!

  8. Amanda

    Great list! Conquering all of those bad habits will definitely put you on a good financial path.

    My husband and I used to have a bad habit of buying new cars, paying them off and then buying another a couple of years later, only to continue the cycle. Though we did pay off the loans quickly, when I think of what we could have done with all of that money (retirement accounts!), it makes me cringe. I’m glad we broke that habit, for sure!

  9. Amanda

    Such a great post! I’m over here practically screaming yes to how true all of these things are.I think financial education is the first step. I’m a big believer that prevention is key in many cases and if we could stop bad financial habits from even starting this would be great!

    Thanks Michelle! Look forward to more!

    1. Yes, financial education is so important!

  10. The Joneses… o how social media and peer pressure has made this so much harder over the years. Speaking from a millennial perspective, I think investing and becoming financially literate are the hardest as we were born into the great recession which scared a lot of people and many people are quite frankly financially illiterate. Tough problems to solve… If only people would read your blog they would be a lot better off but if you think about it business will have less income as people shop smarter!

  11. For years I ignored my debt. I let it accumulate for no real reason. It took me to almost hit rock bottom to get my act together.

  12. I think what I need to work on the most is coming up with a budget and sticking with it. I often times get strict with my budget when I am in dire need of saving money, but the once I get more financially secure, the budget isn’t as important anymore. I need to learn to stick with the budget ALWAYS no matter what my current cirumstances are.

  13. akshay

    Great post Michelle,
    when i was going through the post, i really felt unhappy that i dont follow even a single point you mentioned, indeed these are the must follow points in there life, thank you for sharing the post, if i would have not read the post, i would have never recognised the importace.

    1. Oh no! Well, I’m glad this blog post helped you 🙂

  14. I think one thing my husband and I struggle with is developing our skills to earn income on the side. We are frugal, we try to live within our means as much as possible (with the exception of when we took loans to go to law school), we save for retirement, etc. But I don’t think either of us have been good so far at developing extra streams of income on the side which would really help us pay off our debt more quickly or invest toward other projects. This is something I want to work on this year.

    1. Yes, definitely work on that. Extra streams of income are great!

  15. Not facing debt resonated with me, particularly a tax bill. It’s not that I ignored it on purpose but had too many problems going on in my life to handle the stresses of talking to them when I had no way of paying. Penalties and interest stacked up beyond control and it just made the situation a whole lot worse. My best advice, face your debt as quickly as you can, sometimes the conversations with creditors are not as bad as they seem.

    1. Yes, for sure! Facing your debt sooner rather than later is a great tip.

  16. Apathy Ends

    The average credit card debt is crazy! If making minimum payments it will take FOREVER to get out and cost a boat load in interest – we still have debt (student loans – car – mortgage) but the highest interest rate it 4.25 and the lowest is .9%

    1. Sadly, many people think that making the minimum payment is all that they need to do. I’ll need to make a blog post about that as well!

  17. I’m sure this is a big eye opener for so many people! The two that stuck out to me were the emotional buying and lack of financial education. Emotion spending is dangerous because we can always find an emotion or reason to make a purchase. We have to put that aside and think about the big picture. And financial education is so important! I’m making it a point to make sure my kids have all the education around finances that I can give them. Starting young is huge!

    1. Yes, starting young is so important.

  18. I’ll admit that investing feels very intimidating. That said, I can’t wait to dig out of debt and start learning about investing my money. Then it can finally work for me!

    Happily, I have never been one to care what the Joneses are doing. And now that we have implemented the #yearofno in our home, making decisions about spending is easier than ever!

  19. Ignoring the importance of financial education is what gets me. I work in finance, and it amazes me the number of finance specialists who are clueless about their own personal finances. Like an out of shape doctor, they know they should be educating themselves but they continue to push it aside.

    It’s baffling. We spend years going to elementary school so we can be prepared for high school, then study during high school to get into a good college, then spend years in college (and thousands of dollars) to earn a degree that will provide a well-paying job. Yet the minute that first paycheck hits the bank account, the blinders come out and most won’t spend 5 minutes educating themselves on what to do with it.

    1. You said it all PERFECTLY!

  20. Keeping up with the Joneses is such a good one (or should I say bad one :)). Moving to one household income (temporarily!) has really opened my eyes…we don’t need a huge house, we can keep our cars for a very long time. We are planning better and saving more.

    Thanks for the great reminders!

  21. I am guilty of engaging in many bad money habits. Left and right. In the younger years, we spent money carelessly without thinking about our financial future. What about 401k? What about Pension? What about putting money away in addition to getting a social security check monthly? We don’t think about those things in teenage years or our 20’s or early 30’s. We do what we want instead thinking in the moment and then deal with it later when it comes down to us being broke.

    Keeping up with the Jones’s is something almost everyone today is guilty of. That consists of dressing with the Polo by Ralph Lauren when you know you have no job living at home with mommy and still in high school, dressing with the Tommy HIlfiger, Timberland, Gucci, DKNY, and Girbaud clothes in addition to Louis Vuitton when you know you have no life savings whatsoever. All for what? Just to look good and rock the brand name fashion labels. We were young and materialistic back in the day while keeping up with the Jones’ but didn’t care if we had not a dime to our name. As long as we looked good that’s all that mattered thinking in the moment.

    And sadly, some people do think they are invisible until the reality of life hits them financially smack dab in the kisser.

    1. Yeah, I was bad with money when I was younger too. Thankfully, I know now!

  22. Lindsey

    Not investing is a big one for us right now. We are still trying to find that sweet spot between having a nice savings account built up and wanting to be able to start investing.

    1. Sounds like you’ll be there soon 🙂

  23. Love the example about Keeping up With the Joneses. Whether you’re 5 years old or 40, they’re still just toys in the end! But when you’re 40 the toys are much more expensive.

  24. Habit #8: Starbucks

    But in seriousness, next time you look at the Joneses, consider the fact that they only give the appearance of wealth when in fact their finances are likely in shambles. I’d rather drive a piece of crap and have my kids’ college funds complete.

    Bet the Joneses don’t have that.

  25. JM

    It’s silly how people tend to associate the things they buy with their sense of self-worth. There is a certain sense of freedom when a person is debt-free. In the end, people need to find what makes them happy, and material things are not what will get them there.

  26. This reminds me of the expression back in college,

    “But I can’t be out of money. I still have checks.”

  27. Bradley C

    Fantastic list! I personally have fallen into a few traps. Maybe the biggest one was the need to “buy” a new car every year or so to keep up with the Joneses. Of course, I was in no position financially to do so, so I “bought” the cars with loans. I kept trying to convince myself that new cars won’t have expensive repair or maintenance bills and “buying” new was better in the long run. Finally, I sat down to really dig into how much debt I had about a year ago (including a car loan). I was shocked! But, it might have been the best thing I could’ve done. Now I know where I actually stand and I am happy to say that I paid my car off 6 months early! Now, on to the dreaded heap of student loans, which I sometimes wonder if my education was worth the price…

  28. Sometimes I feel like it’s those two or three bad months that can blow up your whole year. Christmas is a disaster for us every year, no matter how hard we try to “not spend a lot this year.” We suffer the consequences for months. I have tons of family birthdays – both my sisters and a million nieces and nephews, that all come at once, along with Mother’s Day and Father’s Day – that always leaves us wounded. And summer vacation is a sure $3000 on the credit card. Even if you can be perfect the rest of the time, these “bad months” can kill all the progress you make all year. We’re skipping a big vacation this summer. We are out of debt and I refuse to go back.

    1. Good job for realizing this!

  29. Soooo many people think that budgets are only for the “poor.” I hope one day everyone realizes that budgets are for everyone.

  30. Great list. I think the big one for people who make good income is having a budget. We used to think that we’ll be fine as long as we spend less than we make. Once we started tracking our expense, we saw a bunch of frivolous spending. Having a budget isn’t fun in the beginning, but it gets much easier as you keep at it.

  31. Completely agree. bad spending habits that break my budget. first think what you need and how much you budget and what will effect. need proper management for spending money. Thanks for sharing your valuable tips.

  32. Believing you’re invincible.

    I’ve been smacked in the face with that one a couple of times now. You’d think I’d learn, right? But sometimes you’re so engrossed in what you’re doing, and it’s going so well, you don’t see the truck that’s heading right for you.

    Each time it’s happened my finances have been wiped out. The last time was just a couple of years ago. I’m banking on that being the LAST time it ever happens to me. Also a great reminder for why you need multiple sources of income.

    Luckily, I’ve never cared too much about what the Joneses are up to. 🙂

    1. Yes, having multiple sources of income is always a great idea!

  33. Tennille @ Two Kids And A Budget

    This is a great list of bad money habits. The only one I am currently falling under is the fear of investing. Not knowing where to start or whos advice to trust makes it hard to get going.

    Frequent eating out, and not following your budget are other common bad money habits many people have. And to be completely honest my husband and I have had these two bad money habits in the past.

  34. Nayeli @

    Amazing list Michelle!

    Fortunately none of these have kept me broke, but I’m still not as financially stable as I would like. I’m still educating myself on Financial Literacy, and keeping a budget is a lot more challenging than people think.

    Investing, is something that I haven’t done yet, not so much because I’m afraid, it’s mainly because I am not knowledgeable enough to invest wisely.

    Thank you so much for sharing!

  35. Beth

    I am working on the issue of thinking I don’t need a budget. I find it hard when I feel like I HAVE to follow this budget. I start to feel too constrained and say to heck with it. I am trying though. This month I have made a mini budget and I am giving it a shot.

  36. ZJ Thorne

    Being afraid of investing was my worst money habit. I started breaking it last Fall when I finally opened an IRA. It was an emotional and scary thing to start.

  37. Michael

    Getting out of debt was the most difficult part. After that, it has been a rewarding journey in terms of learning, saving, and investing.

  38. Jane Allen

    For me, having a budget was a major issue. I just couldn’t wrap my mind around the concept. But, this year, I made a decision to change. I’m already seeing some progress but I know things could be better. Thanks for sharing this. That tip on emergency funds is gold.

  39. Great List !
    When you have multiple reading of a single idea, some time nor other our brain will tell to take some good decision. The above ideas are very commonly told by every financial channel but going through them every time will some time later makes you to think what are you doing financially, though we are not kids. Idea is always remain like an idea..

  40. Diana

    Why do you have a picture of the “Volcom” surf house on the north shore and associate that with bad habits and going broke? Those pro surfers are far from broke!

    1. Ha, you are right! It’s just a picture of a house – many times people fall to lifestyle inflation. Sadly, many of those guys fall to it too.

  41. Lisa

    My fear is of investing in my business. Sometimes I wonder where or when I’ll get the ROI for the money I’ve put in to it. You have written about so many of my problems and it’s so sad to me but it gives me a kick in the rear end to get my finances back in order. Thank you, Michelle!

  42. Dixie

    “Keeping up with the Joneses.”
    When I was around 17, my Dad (a very successful Wall Street attorney)
    told me I was, “Spending money I didn’t have, buying things I couldn’t afford to impress people I didn’t even like.”
    I thought he was dumb as a box of rocks.
    Four years later I thought he might have had something there.
    Three years after that, I couldn’t believe how much the old man had learned in the last seven years!

  43. Michael Haber

    This article is the perfect example of how small changes in our habits can lead upto a bigger change in our health. Great work!