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9 Bad Money Habits You Need to Stop ASAP

5 Mins read

Have you ever sworn to never exhibit a toxic or bad habit, only to find yourself doing exactly that? A great example might be the things you learnt from your parents that you swore you’ll never do. Like screaming over the phone when the person on the other end can hear perfectly if you took it down a notch or something more serious like not breaking bad money habits – the same kind that led to some parents working for years and not properly planning for retirement.

We form habits in different ways and they shape our lives either for good or bad. Therefore, if you’re trying to improve your finances, you need to be deliberate about breaking bad money habits and replacing them with good ones.

Below, I share bad money habits you need to stop ASAP, as well as a few good habits you can imbibe to help you reach your financial goals faster.

Stop these bad money habits 🌚

1. Not preparing for an emergency

Your emergency fund is frankly a great place to start your savings plan. We all know that unexpected things happen all the time – like Covid 19 πŸ™„ – which cost people their jobs and led to salary slashes for many others. So the best way to stay financially secure is to save up for emergencies.

This fund should cover at least three to six months of your monthly expenses, nothing less. For example, if it costs N150,000 to cover your expenses for one month, you should have at least N450,000 – N900,000 in your Emergency Fund. Not having an emergency fund means you will usually need external help or loans whenever you run into money challenges. 

2. Spending as much as you earn or spending more than you earn

If you’re spending as much as, or more than you earn, this means you’re living paycheck to paycheck with no proper plan for the future. This lifestyle makes it nearly impossible to build up significant savings or wealth over the long term. Granted, your income might actually not be much right now, but spending every single penny is still considered a bad money habit. Do not spend as much as you earn on expenses – or worse – spend more than you earn by living an expensive lifestyle. Cut down on expenses so that you can at least have money stored up.

3. Waiting till you “have more money” to save or invest

You know the way they say “If you don’t learn to give N100, you would never be able to give N100,000”; it’s the same with saving and investing. Do not wait to “have more” before you start saving and investing because these two grow over time thanks to the power of compound interest. Thankfully, you don’t need to be a finance expert to start, you can simply use Cowrywise to begin your short and long term savings and investment plans.

4. Relying on loans to pay your bills

This is closely linked to people who spend more than they earn. It is crucial to live within your means because not doing so will lead to you relying on loans to pay your bills. It must be frustrating to have to borrow every month to cover for expenses. To eliminate this, you should drastically cut down on expenses, strategically work to increase your pay or device legitimate means to increase your income.

5. Not taking control of your income streams

So many people are still “winging it” when it comes to earning consistent income where this month is a hit and next month might be a miss. Instead of living like this – where monthly income is never sure, get a job that stays true to paying you every month or build a business that is sure to pay you monthly. With business, the amount you make might vary, but at least make something! The whole idea of being in business is to get revenue and make a profit, but if that’s not happening right now, you should consider using your skills to get a job that brings you consistent income. You can then transition into a full-time entrepreneur.

6. Constantly blaming others for your mistakes

A person who can take full responsibility for their actions is one who is considered mature. We all make mistakes but what differentiates people who learn and people who don’t is responsibility. You may have made bad money moves in the past or might currently be facing the consequence of one. Instead of passing the blame to someone else with thoughts like “it was my parents who refused to teach me about financial freedom”, “it was my silly friend who introduced me to this ponzi scheme”… Take responsibility and retrace your steps.

Your parents indeed could have taught you to imbibe the right money habits, but if they didn’t – forgive them. Take the steps needed to progress and ensure you teach your own children about money. Your friend who told you about the Ponzi scheme – it worked because you also did not do due diligence. If you had thoroughly researched, you would have found out that most firms that promise to “double” your money in such a short time are scam.

7. Hoarding money

The mindset that you need to hold on tight to money for dear life speaks of desperation. Nothing says that hoarding money will make you richer. Build a mindset that says “money does not control me, I control what to do with money”. Be a giver, set money aside for leisure, give (no matter how little) to causes that matter to you. These are just a few ways to feel more fulfilled.

8. Saving without a goal

Often times, money kept without a goal in mind is easily spent. If you want to keep more of your savings, you need to have a clear goal and then set up a plan in order to achieve it. Start by determining the major milestones you hope to achieve in the future, like having a home, a car or paying for education for your kids. Next, determine how much you need to save and for how long. Finally, set up a recurring automatic transfer from your bank account to your savings/investment plans on Cowrywise to ensure you stay consistent with your savings.

9. Dipping into your savings

A tree cannot grow if it’s not watered, and you can’t grow wealth if you keep dipping into your savings. Not having the discipline to save will adversely affect your plan to build wealth. Once you set up savings towards a goal, keep your hands off of the savings till you achieve your goal. Rinse and repeat. To keep you guided, you can create 3, 6, 9 or 12 months goals or more. That way you can focus and achieve a lot more than you imagined.

Bad money habits set you up for failure

There’s no nice way to put this but continuing with bad money habits will eventually lead to tears. Let’s say you’ve had a goal to set up your emergency fund for years but never have, then you must have been burnt by this decision in the past. This is because life happens and when it does, unexpected funds will be spent.

That’s why not setting up your emergency fund, not living within your budget or continually paying your bills using loans will leave you financially vulnerable and can set you up for failure. 😒

Do these to reach your financial goals faster

Here are good money habits you should begin to imbibe right now.

  • Start and maintain an Emergency Fund
  • Create and stick to a budget
  • Document your daily/weekly/monthly expenses so you can measure and tweak your money leaks
  • Pay yourself first by saving a portion of your income every month or every week (depending on how you earn)
  • Save to invest, do not save to spend 🌚
  • Start and stick to your savings and investment plans
  • Pay off all your debt
  • Diversify your investment portfolio between low, medium and high risk

Breaking bad habits and cultivating new ones cannot happen in a flash. However, with discipline and the right information, you can begin to adjust and imbibe better money habits that will lead to financial success.

Want to begin your journey to financial freedom? Start here.


Are there other bad money habits you think people need to stop? Please share in the comments.

You never know who you’ll be helping!

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