Money—it’s something we all deal with daily, yet so many of us struggle to feel truly in control of it. Have you ever wondered why your financial goals feel just out of reach, no matter how hard you try? Chances are, some sneaky money habits are holding you back. These are money habits keeping you poor! The good news? A few small changes can make a massive difference.
At New Era Financial Planning, we’ve worked with countless individuals and families to help them identify these roadblocks and create a clear path to financial independence. Let’s dive into the 7 most common money habits that might be keeping you stuck—and how to turn them around.
1. Paying Yourself Last
Imagine this: You’ve worked hard all month, paid the bills, bought groceries, and splurged a little on the weekend. By the time you think about saving, there’s nothing left. Sound familiar?
This is what happens when you pay yourself last. Instead, flip the script and pay yourself first.
Think of saving as planting seeds for your financial future. By prioritizing your savings and investments before covering other expenses, you’re setting yourself up for long-term growth. Start small if you need to—automating just 10% of your income into a savings or investment account can make a world of difference over time.
2. Carrying Bad Debt
Bad debt is like carrying a heavy backpack on a long hike—it slows you down and drains your energy. This includes high-interest credit card balances and buy-now-pay-later services like Afterpay. While these options may seem convenient, the interest and fees can quickly pile up, keeping you in a cycle of payments.
To break free, start by paying off high-interest debt first (the “avalanche” method) or tackle smaller debts to build momentum (the “snowball” method). And remember, not all debt is bad—borrowing to invest in your education or a home can be a smart move, but it’s essential to keep it manageable.
3. Not Having a Cash Reserve
Life is full of surprises. Whether it’s an unexpected car repair or a sudden job loss, not having a financial safety net can lead to stress and additional debt.
That’s why building a cash reserve is so important. Aim for 3-6 months of living expenses tucked away in an easily accessible account. Think of it as your financial umbrella—it doesn’t stop the rain, but it keeps you from getting soaked.
If saving that much feels overwhelming, start with a smaller goal, like $1,000, and build from there. Every little bit helps.
4. Not Knowing Your Financial Position
Do you know exactly where your money goes each month? If not, you’re not alone. Many people feel in the dark about their finances, which makes it hard to take control.
Start by tracking your income and expenses. Use an app, a spreadsheet, or even a notebook—it doesn’t matter how, as long as you do it. Think of this as creating a roadmap. If you don’t know where you are, it’s impossible to plan how to get where you want to go.
Once you understand your spending habits, you’ll be able to make informed decisions about where to cut back and where to allocate more funds.
5. Having High Fixed Costs
Fixed costs—like rent, car payments, and subscriptions—are the financial equivalent of being locked into a treadmill. They keep you running in place, leaving little room to save or invest.
Take a close look at your fixed expenses. Are there areas where you can cut back? For example:
Could you downsize your living space?
Can you refinance a loan for a better rate?
Are you paying for subscriptions you don’t use?
Reducing these costs can free up funds to focus on your financial goals. Remember, every dollar you save on fixed expenses is a dollar you can redirect toward building wealth.
6. Not Increasing Your Income
While cutting costs is essential, increasing your income can supercharge your financial progress. Many people overlook this side of the equation, but it’s one of the most effective ways to create financial freedom.
Consider ways to boost your income:
Ask for a raise or promotion at work.
Take on a side hustle, like freelancing or tutoring.
Invest in skills or education that can lead to higher-paying opportunities.
Think of increasing your income as adding fuel to your financial engine—it gets you where you want to go faster. Just make sure to channel that extra cash into savings, investments, or debt repayment, rather than lifestyle upgrades.
7. Waiting to Invest
One of the biggest myths about investing is that you need a lot of money to start. The truth? The earlier you begin, the more time your money has to grow.
Think of investing like planting a tree. The sooner you plant, the longer it has to grow and the more shade it will provide in the future. Even small contributions can grow significantly over time thanks to compound interest.
Start with what you can, even if it’s just $50 a month. The key is to get started. Over time, you can increase your contributions as your financial situation improves.
Breaking Free from Bad Money Habits
Here’s the thing—everyone makes financial mistakes. The important part is recognizing these habits and taking steps to change them. At New Era Financial Planning, we’re here to help you do just that.
By addressing these seven money habits, you’ll not only free yourself from financial stress but also set yourself on a path to achieving your goals—whether it’s buying a home, starting a family, or retiring comfortably.
Remember, financial independence isn’t about perfection; it’s about progress. Take it one step at a time, and celebrate every small win along the way.
