7 Money Habits Keeping You Poor (2024)

Growing up, I remember spending a lot of time helping my parents and grandparents cook dinner. We’d carefully made a habit of labelling the jars with special dates for the pickled food I can’t even pronounce. As a kid, I thought we just liked to cook.

The older me realized we can’t afford to do anything else.

To have the rare pizza night felt so posh and bougie.

I’m proud to say my family has since climbed out of that income level and pizza nights happened a bit more often. (No shame here.)

I noticed how my family “got out” of their financial situation while other people remained stuck. It was thanks to several ingredients: nose-to-the-grindstone grit, a rich mindset, and strong habits that compounded results.

We all strive for financial stability and success.

We know poverty breeds misery and stress.

Yet sometimes, our money habits can hold us back from achieving our financial goals. I think my family recognized that. It was (and still is) important for them to look at their spending decisions and see how it can significantly impact the financial stability of the family.

Here are the 7 money habits I observed my family did not do. I’m sure it will help you too.

Recognizing How Poor Money Habits Harm Your Financial Situation

1. Ignoring Your Budget

Our family used to have a family friend who believed she ought to live the life “she deserved” right now.

When the money ran out, she would ask her family or borrow from friends. Or take it from “next month’s budget”. She had a chaotic knack for shuffling money around and always “made it work.” I can’t say she wasn’t a resourceful person. It was certainly a habit.

By the end of every year, she’s burnt out from having to work two jobs and barely making ends meet. Yet, she could not let go of the lifestyle (and the brand bags) she wanted so badly. Her mindset and relationship with money made sure she was never going to build anything.

Overspending and living above her means is what got my family friend financially stuck.

A budget was never meant to be a hindrance or a roadblock to your desired life. It’s a reflection of your current financial state – a mirror of truth, no more or less.

Consulting it regularly when asking “Do I have enough?” or “Is this purchase good for me?” – opens up more financial opportunities in the future.

You would know if you have enough to start that business. You’d know how to spend your time and what priorities to give attention to. I’ve seen first-hand what happens when you deny this.

2. Over-Relying on Credit Cards

“It’s the interest rates that will get you,” says my Uncle.

There’s a sense of detachment when you’re spending someone else’s money. It’s convenient and easy to spend.

The convenience, of course, carries a price. It’s borrowed money, after all. The bill is coming. You may not feel the immediate impact of overspending, but it’s easy to lose track of spending and sticking to a budget. Especially if it becomes a habit.

The high-interest rates also make it impossible to pay off. So for that really nice brand name purse or car – you’ll be paying far, far, more than the ticket price.

While having credit cards are great for the convenience and building credit – it’s also a high potential for the debt cycle.

3. Not Distinguishing Between Needs and Wants

One thing my family took pride in was their ability to be ruthlessly kind.

They’re able to discern exactly what was necessary for us to live and what we could live without. And they can be ruthless when cutting out the fat.

(Ironically, what was an absolute need in the house was a bottle of Sriracha. We never seemed to run out. So we all have certain necessities that feed the soul and keep us from insanity.)

I’d imagine if you cannot be ruthless in the discernment of what was necessary, it will be unkind to yourself and your financial future.

It turned out that we can survive and be happy for a lot less than we thought. When all your necessities are met, there’s less stress. And when there is less stress, there is more gratitude. (Even for a bottle of sriracha.)

4. Not Having an Emergency Fund

“Give every dollar a job to do” – Dave Ramsey

I thought it was pretty cool when my Mum handled a car accident as if it was nothing. She was concerned about two things only: the inconvenience of time to get everything fixed and sorted, and whether or not we were injured.

But she had the “I got this” attitude. Because she did. Nevermind the broken glass and metal on the tarmac.

She gave every dollar a job to do when she got her paycheck every two weeks – and some of that dollar was earmarked as a safety net. What the money actually bought was not a new car or the repairs – what she bought was peace of mind.

She expected the unexpected and was prepared to deal with it financially and mentally. She had no sentiment attached to the car.

5. Not Prioritizing Self-Development

Investing in your self-improvement sometimes means investing in your education and skill acquisition. Adding relevant certificates can increase your earning potential 10%-20%, lead to better job opportunities, and higher salaries. You’re already beating inflation with something that can’t ever be taken away from you!

Self-development also means investing in relationships and networking. Friends are not just there to have a good time, they can be a valuable support network. The people you chose to associate with have a direct positive (or negative) financial situation.

My family took the risk in investing in night classes and courses and all the qualifications in starting their own business. As soon as they’re able, they hired their friends and was able to pay back those who helped them.

That risk paid off.

While not all self-development expenses have clear financial return or benefits, the indirect advantages can lead to a more fulfilling and secure life.

6. Keeping with the Joneses

My parents didn’t feel ashamed of the car they drove or the clothes they wore. They were quite proud that they didn’t succumb to social pressure because they knew they had nothing to prove.

In fact, their prudent example encouraged their friends to be more conscious too.

Social pressure can often lead us to make poor financial decisions. Trying to keep up with each other’s lifestyles is often a shallow competition in the end with unnecessary debt. When social circles are based on material possessions, “one-upping” each other, relationships can be superficial.

Align your spending habits with your values. This means aligning your spending habits with what truly matters to you – and not succumbing to consumer impulses.

You’ll find yourself less stressed, and with more money saved.

7. Poor Spending Habits

Growing up, it was a choice of the family to be conscience of the money that was going out – and the reasoning behind each purchase.

Retail therapy and stress-driven spending are often based on emotional spending and lack of planning. We justify our purchases to ourselves after we buy.

Have you been guilty of any of the following?:

Justifying bulk purchases (“But you save more when you spend more!”)
Falling for marketing gimmicks / Brand Fixation (“But I have to get the complete set – I might as well! It’s a one day sale – they never have sales!”)
Failing to compare prices (“Oh look, this place is selling the same thing for cheaper!”)
Neglecting to return unwanted items (“I completely forgot to return this item – now it’s too late!”)
Not reading reviews before purchase (“This fell apart the first week!”)
Shopping without a list (“How did this end up in my cart?”)

It goes under the radar and sometimes we’re not even conscious of it – but all of it accumulates to a lot of missed opportunities: The things we could have invested in. Or getting out of the paycheck cycle faster. Or not compromising your retirement plan. Or going on that adventure with your friends.

Creating and Achieving Financial Goals

Establishing a Clear Path

Make no mistake: Money management is Life management.

And financial goals – whatever it may be – help better guide actions and decisions. It ensures our money is going towards the most important aspect of our lives and it brings us closer to the life we want.

These goals can range from short-term, like saving for an emergency fund, to long-term, like investing in your retirement.

A few tips to consider while setting financial goals:

Create realistic goals that are challenging but achievable.
Prioritize goals based on importance (eg. paying off debt, emergency fund)
Regularly review and adjust goals as circ*mstances change.
Remain flexible to adapt to unexpected events.

In order to help set financial goals, consider using a tool like a budget. You can check out mine:

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A budget will help track our spending, set financial targets, and make informed decisions about our money. Monitoring our budget will keep us on track and prevent overspending, allowing us to direct more money towards our financial goals.

Safeguarding Your Assets and Future

Once our financial goals are in place, it’s just a matter of sticking to it! How hard can that be?

And I know if you’re reading this, you’re not the type to go quietly into the night or shy away from change.

Aside from managing debt responsibly, it also means making wise investment choices, learning to manage debt responsibly, and ensuring that we are prepared for unforeseen events.

I was lucky my family set a strong example by sticking to a solid game plan.

If we keep up with solid money habits, we can knock out and lessen any money troubles we have.