8 bad money habits you should break –
Introduction 👋
If nobody has ever taught you about money before, it can be really easy to fall into some bad habits. 😟
These bad habits can cost you a lot of money in the long run! 💸
Getting out of them can help you to:
- get on top of your finances 🥳
- increase your income (how much money you make) 📈
- decrease how much you spend 📉
- improve your relationships 💞
- reduce stress 🧘♀️
The sooner you get out of your bad money habits, the better!
Today we’re going to teach you about the most common bad money habits, and how to get out of them!
Disclaimer: This website provides information for guidance and educational purposes only. The Grown-Up School does not provide regulated financial advice. You can seek independent financial advice from a suitably qualified and regulated professional advisor. Check out our disclaimer policy for more information.
1. Spending all of your pay 💸
If you constantly spend all of your pay (or even more than you’re getting paid!), you might struggle to get enough money to:
- Cover emergencies 🚒
- Avoid debt (borrowing money)🌪️
- Have financial freedom to make different choices 🏖️
- Have peace of mind 🧘
- Get protection for the future 🦾
- Help others 💞
- Make expensive things a bit less expensive (when you don’t have to borrow money!)🚗
- Give you more security when you make investments 📈
(8 reasons to start saving money now 🐷)
Regularly putting some money aside in savings (even just a little bit!), can make a huge difference in the long run. 📈
If you set up your bank account to automatically put money into savings every month, you might not even notice the difference! 🔁
2. Not knowing where your money is going 🗺️
How often do you check your bank account? 🏛️
Every month? 😬
Every week? 👍
Every day/couple of days? 🤩
The more often you check on your money, the better! 🙌
Tracking your money helps you to:
- Stick to your budget 📈
- Stay on top of your spending 🧘♀️
- Notice when someone has charged you too much 🕵️♀️
- Notice when your bank account has been hacked! 👮♀️
(How to keep control of your money 💸)
3. Not having a savings goal 📈
Money doesn’t grow on trees, but it does grow when you start saving! 🪴
If you want to save more money, set some clear goals, and a plan to get there.
Think about what you want to save for in the short term, and long term!⌚
4. Using money to impress your friends 💃🕺
We’re constantly surrounded by pictures of rich celebrities in the news, with:
- expensive clothes
- flashy cars
- fancy houses
- luxurious holidays
- posh dinners
You might find yourself thinking that if you copy them, people might like you more – and this could get really expensive! 💸
BUT
Research has actually found, that if you show off with money, it actually makes you less attractive as a friend to people. 👎
So, why not save yourself the money, and just spend quality time with your friends instead? 💰
5. Disorganised debts 🥴
(Debt = borrowing money)
Not all debt is created equal. ⚖️
When you borrow money, some debt/loans are more expensive (high interest), and some are cheaper! (low interest).
(What is interest? (easy explanation) 📈)
If you rank your debts from highest to lowest interest, you can focus on prioritizing the most expensive ones (high interest debts).
Prioritizing the expensive high interest debts and paying them off sooner, will help you to pay less money in the long run!
(Make sure to keep paying your minimum amounts though to avoid getting into trouble!)
6. Paying off the minimum when you borrow money 💳
When you borrow money, you’ll often be given a “minimum amount” to pay back every month. 💰
It can be really tempting to only pay the minimum amount, to give you some money spare.
BUT – this can be a bad money habit to get into, because:
- you’ll end up paying more money over time 📈
- it’ll take you longer to pay off the money you owe ⌚
- other lenders might see you as “more risky” if you only pay the minimum amount, when they look at your credit rating (What is a credit rating? 📈)
If you can get into the habit of repaying your loans in full, or paying back the maximum, it could save you money in the long run.
7. Ignoring insurance 🤷♀️
When you’re young it’s easy to feel like you’re invincible, and avoid insurance to save a bit of money. 💸
BUT
If you need insurance and don’t have it, just one emergency could wipe out all your savings! 💰
Getting insurance is where you pay money to “protect yourself” from different emergencies.
If you find yourself in the emergency, you will often be given emergency money to help you.
You can pay for insurance to help you in situations like:
- Your phone breaking (mobile phone insurance) 📱
- Pets getting sick (pet insurance) 🐶
- Your car getting stolen (car insurance) 🚗
- A house fire damaging your building (buildings home insurance) 🔥
- Flooding damaging your belongings at home (contents home insurance) 🚿
- Losing your income because you’ve become ill/disabled (income protection) 💼
- You or your partner passing away (life insurance) 🥀
- You getting a critical illness (critical illness cover) 🩺
- Having troubles on holiday like getting burgled (travel insurance) ✈️
If these emergencies happen you can get paid a sum of emergency money when you have insurance cover in place.
It’s important to consider getting insurance to make sure you can pay for expensive emergencies!
8. Putting off investing ⛔
A lot of people say “I’ll wait until I have more money” instead of investing.
However, it can actually be very easy to invest with small amounts of money! 👛
If you’ve:
- got your emergency savings sorted 🚑
- prioritized your high interest (expensive) debts 📈
- planned retirement 🧓
- planned how to pay off your low interest (less expensive) debts 📉
(How to start looking after your money 🌱)
and you’re:
- keen to grow your money 🌱
- happy to take on some risk 📉
investments might be your next stop.
Investing is where you buy something, expecting that it’s going to increase in value. 💸
You could invest in exotic things like: 🌴
- Art 🎨
- Wine 🍷
- Vintage cars or motorcycles 🚗
Or the 3 main traditional investments: 📜
- Stocks/shares (small slices of businesses – you own a small part of the business) 💼🍰
- Bonds (loans to a government or business – they pay you back – with interest!) 🏛️💰
- Funds (your money gets pooled together across lots of investments, can be both shares and bonds) 🏊♀️💦
If you want to get started investing, there are lots of resources available online to help you!
Conclusion 👍
So that’s it!
If you can afford it, you should try and break these money habits:
- Spending all of your pay 💸
- Not knowing where your money is going 🗺️
- Not having a savings goal 📈
- Using money to impress your friends 💃🕺
- Having disorganised debts 🥴
- Paying off the minimum when you borrow money 💳
- Ignoring insurance 🤷♀️
- Putting off investing ⛔
If you know any friends or family members who might benefit from learning about bad money habits, share this post with them!
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