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According to the author of one of the most popular books on habits out there – Atomic Habits – James Clear, habits refer to the small decisions you make and actions you perform daily. The book teaches about habits and how just the little things you do could make a great impact on our lives.


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One important area of habit that every one of us has and which we often do not realize is money habit. Your money habit refers to the prevailing actions and decisions you take in relation to money. Your money habits play out every day. And they go a long in determining your financial state.

Just like every other habit, bad money habits are easy to be developed and tend to stick longer than good money habits. And because we picked them up easily, we often come to accept them as being part of us without realizing they were habits we learned along the way.

Below, I have listed 6 bad money habits individuals have that affect them greatly. In case you notice that you have one or more of these habits going on for you, I have made recommendations on what you can do to correct them.

Unbudgeted Spending

A financially intelligent person understands that no money should ever be spent without being properly budgeted. It is a wrong money habit to spend on impulse.

What You Can Do: Before you go to the mall or market for your shopping needs, discipline yourself to always go with a list of things to buy from that particular shopping trip.

Spending Every Money Made

When I was a kid, I started a business and on the first day of my business, I made 30 Naira in profits. I subconsciously pegged my daily profits at 30 Naira. Subsequent days after that, I will always spend every extra profit I made after I had removed my 30 naira profit. It took the help of my mum for that habit to be corrected. It is a wrong habit to spend as much money as you make.


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What you can do: Determine and define ahead of time how much of your income will be spent and how much will not. Develop a plan on where and how to spend every money you make. Also, you can set up mechanisms that will help you take out a percentage of your every income. For instance, you could set up a standing order with your bank to save a percentage of your money in a different bank account

Spending More Than You Make

To spend more than you make is to leave yourself in debt. Many salaried workers have the habit of spending more than they make and this is a wrong money habit. Many businesses have failed due to this singular reason. Most of the time, individuals spend more than they make in a bid to prove to friends that they have arrived or to meet

What you can do: Decide to live within your means and not above them. Live and eat in places your level of income can comfortably cater for without you running into debts.

Piling Up Debts:

Debts are easy to get into but hard to come out of. Piling up debts to your name is a bad money habit.

What You Can Do: Stay out of debt however you can.

Borrowing To Pay Debts

Even without a degree in Economics, we don’t like hearing it when our government tells us they are borrowing, especially when the money to be borrowed will go towards servicing debts. This is a bad money habit.


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What You Can Do: When you are in debt, prioritize the repayment of the debt. Pay off every debt as soon as any income comes to you.

Spending From Your Reserve Or Emergency Fund

One of the things I always encourage individuals to do is to maintain a reserve savings account or emergency fund that they could fall back on when needed. I also have seen many who after setting up their reserve or emergency accounts still go on to spend from this even when there is no emergency. This is a bad money habit and could leave you broke and helpless.

What You Can Do: Discipline yourself to not spend from your reserve account, no matter what. You can set up your account in such a way that you are easily discouraged from withdrawing from it. Such measures include operating the account with a debit card or bank app.

Closing Thoughts

Identifying and working on your bad money habits will save you a lot. However, the challenge with bad money habits is that you may not even have realized that they are bad money habits until they are pointed out to you. Thank God, you now know 6 bad money habits and what you could do about them if you have them.

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This article was first published on 23rd July 2022

victor-ifegwu-mbonu

Ifegwu-Mbonu Victor is a Personal Growth and Leadership Trainer who provides training and coaching to individuals and organizations.


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