14 Bad Habits You Should Stop In Order to Save Hundreds of Dollars a Month
The phrase “it’s a bad habit” can encompass every undesirable act, from chewing fingernails to blowing through stop signs. If there was ever a “bad habit” that most Americans share, it’s overspending. What an insidious habit it is, too.
U.S. household debt rose steadily (and alarmingly) between 2013 and 2023, with total debt growing by $800 million between 2022 and 2023 alone. Our spendthrifty demons are winning, and we need help.
Perhaps you can try eliminating one bad spending habit at a time and, starting a good habit to replace it.
1. Spending Too Much on a 0% APR Card
For the financially savvy, 0% APR credit cards are like interest-free loans. You may have a year or more to pay down purchases and balance transfers without paying a dime in interest (though you may face a fee for a balance transfer).
However, utilizing a 0% APR card requires restraint. Many cardholders have run up multi-thousand-dollar balances and failed to pay off those balances before the interest-free period expired. The credit card company is banking on this self-sabotage when it offers you the deal, so don’t give them satisfaction.
2. Not Tracking Expenses
Awareness of a problem is the first step in solving it. Most Americans have a general sense that they’re spending more than they can afford, but they haven’t mustered up the courage to look at the monster under their bed.
Whether you download a budgeting app, set up your own Excel sheet, or use other means to detail your monthly expenses (and a corresponding budget), you will continue grasping for financial security in the dark abyss of overspending.
3. Regularly Drinking Anything But Water
Anyone who has seriously embarked on a diet knows that sugary drinks are overrated. Coffee is more complex to quit, but iced tea and Red Bull? If you’re struggling to save money, the drinks have got to be the first luxury to leave the budget.
If you can’t break the coffee habit, just avoid Starbucks, PJ’s, or your coffee vendor of choice. Even if you prefer organic beans over Folger’s, making them at home is far more cost-effective than buying them on the road.
4. Re-Spending on a Credit Card You’ve Gotten Down to $0
Whittling away at a credit card balance is a feat. Don’t mess it up by talking yourself into getting back into debt on the very same card.
In fact, those who are truly committed to a life of financial freedom will close all but their emergency credit card once the balances are paid. You can’t spend it if you don’t have it, and too many of us (guilty) treat our credit balance like a blank check—in reality, it can be a financial albatross.
5. Not Checking Your Bank Statements
Ignorance is not bliss. Quite the opposite, in fact. Ignorance of one’s bank statements is often a recipe for long-term financial stress.
Even an undetected, recurring ten-dollar subscription can compound over a year (or longer). If you aren’t looking at your statements, it’s easy to convince yourself that your DoorDash orders are less frequent than they are. Not keeping tabs on your financial indiscretions is a bad financial habit in and of itself.
6. Taking Out Debt for Depreciating Assets
Namely, cars. You can also count boats, electronics, and other items that tend to lose value over time as bad ideas if you take out debt to purchase them.
More than 40% of US Americans now have a car payment (and the interest payments that come with a car payment). Four percent pay more than $1,000 for a vehicle monthly. That doesn’t seem like a large percentage, but it’s more than it should be.
7. Convincing Yourself Non-Essential Purchases Are Essential
Do you need a fourth living room lamp before you’ve built up an emergency fund? A new set of free weights might benefit your health, but will push-ups and old, rusty weights do the trick until you’ve paid off your car loan?
Regarding the line between “wants” and “needs,” we Americans have a collective case of cataracts. Life is too short to live in squalor or pinch every penny, but it’s also far too short to live in financial insecurity.
8. Taking Out Debt to Pay for Debt
Terms like “doubling down” or “borrowing from Peter to pay Paul” shouldn’t be in your financial lexicon. Most of us have made financial mistakes we’d like to take back. Whether you compound the mistake is the difference between a reasonably quick bounceback and long-term financial distress.
Speak to a loved one or colleague who knows their financial stuff before taking out one loan to pay for another. Otherwise, you risk worsening an annoying trickle into a devastating flood.
9. Letting Your Lifestyle Creep
When you go from making $30,000 per year to $60,000 per year, you think you made it. When you go from $60,000 to $100,000, you feel like you’re on the cusp of retirement. Everyone who has ever experienced a significant pay increase has felt the temptation to spend like they’re Liberace, and you must fight the impulse.
Those who are able to earn more without spending more are on the fast track to financial security and early retirement. You’re just running in place if you spend more as you earn more.
10. Cosigning for Losers
They might be your kid. They might be an uncle. Heck, they might just be a good friend. If you aren’t 100% certain (like, put-your-life-on-it certain) that someone you cosign for will pay the money back, you probably shouldn’t cosign for them.
Few Americans are in the financial position to weather a co-signer defaulting on a loan. You don’t owe your financial reputation to anyone, no matter how much you love them.
11. Spending Money Before Saving Money
One perk of budgeting is knowing how much money you need for rent, internet, and other essentials. You can even predict food costs and other variable expenses if you are true to the budget.
This knowledge allows you to sock some money away each time you get paid, circumstances permitting. If you only save what you have left over after spending your paycheck, odds are you won’t save much.
12. Being Complacent with the Minimum Payment
There are few areas of life where doing the bare minimum will yield the desired results. Paying your debts is no exception.
Those who only pay the monthly minimum payment on their credit cards and other debts are in for years of avoidable financial loss. Credit card companies love slackers, but you should strive for something greater—start with the minimum payment plus one dollar, then go from there.
13. Letting Your Money Sit in Low-Interest Accounts
You may be foregoing hundreds of dollars per month (or more, depending on the volume of your accounts) by keeping too much money in low-interest checking and savings accounts.
Many high-yield savings accounts are paying around 5% APY. If you have even more risk tolerance, you might invest your passive money in the market. Either way, earning a penny a year in a Chase checking account means losing potentially significant unrealized gains.
14. Thinking Consumerism Will Make You Happy
Many of us seek a high through spending. Like all highs, though, the spending rush is followed by a corresponding dopamine deficit. How many times will we try to convince ourselves that a product will make us happy, only to find that the resulting financial loss only diminishes our quality of life?
When your decades of frugality and investments have paid off, buy whatever you want. Until then, reject the groupthink that spending is happiness—quite the opposite is true.
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