7 Money HABITS Keeping You Broke & In Debt

Do you know the money habits that will keep you broke and in debt? Do you know what financial habits prevent you from saving as much money as you would like?

We’re all creatures of habit and those habits can be either good or bad. Those bad habits might not seem so bad in the moment but they can have long lasting effects.

Let’s talk about some of the bad habits that keep you poor and in debt. Replacing these bad habits can help you go from living paycheck to paycheck or struggling with debt to saving money, investing, and building a financially free future.

money habits keeping you poor
Money Habits Keeping You In Debt

Before I identified these bad habits I was in debt and not earning enough money to live comfortably. Removing these bad habits allowed me to build multiple income streams, pay off debt, and start building wealth.

Let’s go over these bad money habits and I’ll share some ideas on how to improve them as well.

Not Investing

One habit keeping you poor is not investing. You are never going to build wealth by putting off investing because you feel like you don’t have the money.

If you are not investing your money is not going to grow over time. Without investing you are ultimately setting yourself up to be poorer in the future.

In order to be better off in the future you will need to be investing. That investing can be in the stock market, real estate, or some type of investment. But to improve your future you need investments that will grow and compound and work for you. Otherwise you are losing the value of your money through inflation when more money is printed and your money does not go as far in the future. 

Not investing is not something you can afford to do because this habit of avoiding investments will keep you poor. To change this bad habit you can start investing even a small amount each paycheck. You can start with tax advantaged retirement accounts you have access to at work and build from there.

Being Disorganized

You know how hard it is to find something you’re looking for in a messy house? You spend extra time trying to find the thing you are looking for often. Some people end up buying duplicates of things they already own because they just can’t find things.

Disorganization on any level will keep you poor. If you are disorganized with your finances there are many many ways to lose money. 

When you are disorganized you are more likely to miss due dates. You will pay late fees. You could end up ruining your credit score of even with bills in collections. When you are disorganized are also much more likely to overspend and end up in debt when you are disorganized.

Getting organized is one of the best ways to improve your financial life. Need a bit of help getting organized? Check out the Budgeting Bundle | All In One Financial Printable For Budgeting, Savings, Debt Payoff.

Budget Planner Printable Bundle | Financial Printable Bundle | Budgeting, Savings, Debt Payoff 1
All In One Financial Printable For Budgeting, Savings, Debt Payoff

Impulse Purchases

Buying things you want in the moment for instant gratification is one way people stay poor. 

Unfortunately there are many factors here since stores and websites make impulse purchases as easy as possible. When you are online there is so little friction when you are making a purchase on a site like Amazon that it doesn’t even feel like you are spending money. It’s very easy to get into an impulse one click purchase habit with sites you love but this habit can cause you to overspend and keep you poor in the long run.

If you are an impulse purchaser, you can combat this in a few ways like implementing a wait 24 hour rule, unsubscribing from emails that encourage shopping, and removing your credit cards from any websites that store them to make checking out easier. 

Not Having Goals

If you want to achieve something, then you need to create clearly defined goals. Not doing this means you’ll be less likely to use your money wisely and much more likely to spend it on things that don’t move you forward. 

It is a good idea to set some short-term and long-term goals for your money so you know what you are working towards. I highly recommend you set big goals for long-term things like retirement but also throw in some fun ones too for the short-term like saving for a vacation in a few months. 

You will need to have goals to work towards in order to stop being poor but you need to balance it with fun goals so you don’t burn out on saving too. 

Not Tracking Your Numbers

The biggest habit I see that keeps people stuck financially is their lack of tracking. People who don’t track their progress and don’t track their spending and don’t track any of the actual details of their financial life are more likely to fail at achieving their financial goals.

It’s especially useful to track your progress when you are working toward a big financial goal. When I was paying off $43,000 in debt I made sure to track my progress by creating visual debt payoff trackers and also making youtube video updates about my progress. This kept me focused and improved my ability to achieve the goal.

Tracking your numbers allows you see how little bits of progress add up. Maybe you aren’t always perfect with your plan but you can see through tracking that over time even 90% effort builds up to something substantial with money.

There are lots of ways to track your numbers so pick one that works for you. Maybe it’s visual trackers that you color in or a spreadsheet that you update or an app like I use to track my networth. I’ll leave links in the description to my favorite options for these to help you out.

Not Using Credit Cards Properly

Credit cards can be a great tool but they can also be a terrible mistake that keeps people poor. Learning how to using credit cards properly and then actually doing it is critical because if you don’t you’ll wind up paying a lot of interest on consumer spending. Paying that interest is working against you financially and will keep you poor.

using credit cards responsibly
How To Use Credit Cards To Improve Your Credit Score

Not using credit cards properly also will ruin your credit score which means you’ll pay more when you need to borrow money for things like a car or a house. Bad credit can be very expensive when you make long term purchases using debt. 

A few basic tips to improve your credit card use include always paying off your cards each month and never paying interest, paying your payment on time and never late, a low utilization rate meaning you don’t max out your card limits, and reevaluating your spending to see if credit cards are working in your favor or not.

Buying The Most You Can

Another habit that keeps people poor is buying the most they can for big purchases like a home. You’ve likely heard the phrase “house poor” before and it’s a bad place to be in where you have purchased a more expensive home than you can comfortably afford each month.

Buying a house that is too expensive for you means you’ll be cash strapped every month. You have to put so much of your monthly cash flow into your home. In these cases it might even be better to rent cheaply than to buy.

It’s important to purchase a home in a price that allows you to comfortably cover the mortgage payment with 25% of your monthly income. You can run many home affordability calculators to get a reasonable price range. Otherwise you’ll be strapped and have less money to save and invest and move forward financially. 

Spending Time With The Wrong People

They say you’re the average of the five people you spend most of your time with so it’s easy to see how spending all your time with certain people could keep you poor. 

money goals calculate budget and plan for financial goals
Who You Spend Time With Affects Your Money Habits

If the people you are always with spend all of their money and always feel broke those habits are likely to transfer to you. If they have expensive tastes you’ll feel the pressure to keep up their level of spending. The people we surround ourselves with impact how we spend money and how much money we spend.

It’s important to find groups of people in your life that have similar views and goals for their money. This will allow you to further your financial progress by being surrounded by like minded people.

Lifestyle Creep

A lot of people spend more money on their living expenses as they make more money which is how people making six figures often end up living paycheck to paycheck and feeling poor.

Lifestyle creep is very easy to fall into as you get raises and age and want nicer things. It can happen slowly as you start to upgrade things here and there but a lot of times this lifestyle creep habit gets out of hand because we don’t realize how far it’s gone. 

Moving into bigger living spaces, buying more expensive cards, upgrading all your furniture and phones… all of these things are lifestyle creep that can keep you poor. Unfortunately some people even go so far they continually take on debt to fund these lifestyle upgrades. This will compound on itself as you are spending more and more and more as your lifestyle goes up.

To combat this you need to actually track your spending and see where your money is going and your spending makes sense compared to your income. Instead of increasing the amount you are spending on your lifestyle you want to evaluate your savings and see if you can raise your savings rate. 

Mary is the founder of Pennies Not Perfection where she shares her journey to build wealth through online income. She quit her day job in 2021 after she paid off her debt and doubled her 9-5 salary.

Mary's favorite free financial tool is Personal Capital. She uses their free tools to track net worth and work toward to financial freedom.

Her favorite investment platform is M1 Finance, where she built a custom portfolio for free with no fees. She shares her portfolio growth and savings progress every month on YouTube.