Seventeen Bad Financial Habits

Good habits play a crucial role in personal finance by fostering discipline and consistency: 

1. Setting aside a portion of income builds financial security and emergency savings

2. Avoiding impulsive spending and practicing delayed gratification prevent unnecessary debt and promote smarter purchasing decisions

3. Regular investing, such as contributing to retirement savings accounts, takes advantage of compound interest and market growth over time

Conversely, bad financial habits can drain wealth, increase stress, and prevent people from achieving financial security. Below, alphabetically, are seventeen bad financial habits to avoid:

Cosigning Without Understanding the Risk- Being responsible, potentially, for someone’s debts.

Delayed Retirement Savings- Missing out on decades of investment growth and compound interest.

Financing Everything- Using loans for furniture, appliances, and vacations instead of saving up for them.

Forgoing Employer Matching- Missing out on “free money” (e.g., 401(k) match) to increase future retirement security.

Ignoring Credit History- Not monitoring or improving your credit can cost money over time.

Impulse Buying- Making unplanned purchases without considering their budgetary impact.

Incurring High-Cost Debt- Using payday and car title loans and high-interest credit cards.

Investing Without Research- Buying stocks, crypto, etc. without fully understanding them.

Lack of Tax Planning- Ignoring tax-saving moves such as Roth conversions, bunching, and QCDs.

Lifestyle Creep- Increasing expenses as income rises instead of saving or investing this money.

Living Paycheck to Paycheck- Not saving any money and using each paycheck to cover expenses.

Not Having Financial Goals- Lacking plans for savings, investments, and major purchases.

Not Shopping Around- Overpaying on insurance, loans, purchases, or subscription services.

Paying the Minimum on Credit Cards- Incurring high interest costs and prolonged debt.

No Emergency Fund- Leaving yourself vulnerable to unexpected expenses such as car repairs.

Not Tracking Expenses- Spending money mindlessly without keeping tabs on where it is going.

Using Credit for Necessities- Buying food, etc. with plastic and revolving a balance with interest.