Investment

20 Common Financial Habits That Are Ruining Your Wallet: How To Avoid Them And Build Wealth

BY Steve Biko Wafula · April 27, 2023 12:04 pm

KEY POINTS

To avoid impulse buying, make a list of what you need before going shopping and stick to it. Avoid shopping when you are hungry or tired, and limit your exposure to advertising.

KEY TAKEAWAYS

Not asking for help is a habit that can drain your wallet. Whether it's seeking the advice of a financial advisor, asking for help from friends and family, or seeking assistance from a charitable organization, there are many resources available to help you manage your finances. To avoid this, don't be afraid to reach out for help when you need it.

Money management is the process of managing one’s financial resources to ensure that they are being used in the most effective and efficient way possible.

It involves creating a budget, tracking expenses, saving for the future, and investing wisely. Money management is not just about making more money, but also about using the money you have in the best possible way. It requires discipline, planning, and a long-term perspective.

Good money management practices can help you achieve financial stability, reduce financial stress, and build wealth over time. Conversely, poor money management practices can lead to debt, financial insecurity, and missed opportunities. In short, money management is about making smart financial decisions that enable you to achieve your financial goals and live the life you want, both now and in the future.

Money management is essential for wealth creation. However, it is not just about saving and investing, it is also about identifying and avoiding bad money habits that drain your wallet. These habits are the roadblocks to wealth creation and can leave you struggling financially.

Impulse Buying:

Impulse buying is one of the most common habits that drain your wallet. It refers to the tendency to make unplanned purchases on a whim. This habit is often fueled by emotional triggers such as stress, boredom, or a desire for instant gratification. To avoid impulse buying, make a list of what you need before going shopping and stick to it. Avoid shopping when you are hungry or tired, and limit your exposure to advertising.

Overspending on Food:

Another habit that can drain your wallet is overspending on food. This includes eating out too often, buying expensive snacks and drinks, and wasting food. To avoid overspending on food, plan your meals ahead of time, cook at home, and buy in bulk. Avoid buying pre-packaged or convenience foods, as they are often more expensive.

Not Tracking Your Expenses:

Not tracking your expenses is another habit that can drain your wallet. When you don’t keep track of where your money is going, it’s easy to overspend and lose track of your financial goals. To avoid this, use a budgeting app or spreadsheet to track your expenses, and review your spending regularly to identify areas where you can cut back.

Paying for Unused Subscriptions:

Paying for subscriptions you don’t use is another habit that can drain your wallet. This includes gym memberships, streaming services, and magazine subscriptions. To avoid this, review your subscriptions regularly and cancel any that you don’t use or need.

Buying Cheap Products:

Buying cheap products may seem like a good way to save money, but it can actually end up costing you more in the long run. Cheap products often have poor quality and need to be replaced more frequently, leading to more spending in the long term. To avoid this, invest in high-quality products that will last longer.

Failing to Negotiate:

Failing to negotiate is another habit that can drain your wallet. Many people are afraid to negotiate for fear of coming across as pushy or rude, but negotiating can actually save you a lot of money. Whether you’re buying a car, negotiating a salary, or haggling over a price, don’t be afraid to speak up and ask for a better deal.

Not Taking Advantage of Discounts:

Not taking advantage of discounts is another habit that can drain your wallet. Whether it’s using coupons, taking advantage of sales, or signing up for loyalty programs, there are many ways to save money on the things you need. To avoid this, always be on the lookout for discounts and take advantage of them whenever possible.

Ignoring Maintenance and Repairs:

Ignoring maintenance and repairs is another habit that can drain your wallet. When you neglect to maintain your car, appliances, or home, you run the risk of costly repairs down the line. To avoid this, keep up with regular maintenance and address any issues as soon as they arise.

Paying for Services You Can Do Yourself:

Paying for services you can do yourself is another habit that can drain your wallet. This includes things like cleaning, lawn care, and basic home repairs. To avoid this, learn how to do these tasks yourself and save money in the process.

Related Content: The Value of Money: A Tool, Not A Goal

Not Shopping Around:

Not shopping around is another habit that can drain your wallet. When you settle for the first option you come across, you may be missing out on better deals elsewhere. Whether you’re shopping for groceries, insurance, or a new phone plan, take the time to compare prices and find the best value for your money.

Using Credit Cards Carelessly:

Using credit cards carelessly is another habit that can drain your wallet. When you use credit cards to make purchases you can’t afford to pay off, you can quickly accumulate debt and high-interest charges. To avoid this, use credit cards responsibly and only make purchases you can afford to pay off in full each month.

Not Building an Emergency Fund:

Not building an emergency fund is another habit that can drain your wallet. When unexpected expenses arise, such as car repairs or medical bills, you may be forced to use credit or dip into your savings, which can set you back financially. To avoid this, aim to save at least 3-6 months’ worth of expenses in an emergency fund.

Investing Without Proper Research:

Investing without proper research is another habit that can drain your wallet. When you invest in stocks, mutual funds, or other investments without doing your due diligence, you may be taking on unnecessary risks and potentially losing money. To avoid this, educate yourself about investing and take the time to research any investments before making a decision.

Gambling:

Gambling is another habit that can drain your wallet. Whether it’s playing the lottery, betting on sports, or visiting a casino, gambling can be a costly habit that can quickly spiral out of control. To avoid this, limit your gambling or avoid it altogether.

Keeping Up with the Joneses:

Keeping up with the Joneses is another habit that can drain your wallet. When you feel the need to keep up with your friends or neighbors by buying the latest gadgets, clothes, or cars, you may be overspending and putting yourself in debt. To avoid this, focus on your own financial goals and priorities, and resist the urge to compare yourself to others.

Not Planning for Retirement:

Not planning for retirement is another habit that can drain your wallet. When you don’t save enough for retirement, you may be forced to work longer or rely on Social Security, which may not be enough to support your lifestyle. To avoid this, start saving for retirement as early as possible and consult with a financial advisor to help you plan for the future.

Falling for Scams:

Falling for scams is another habit that can drain your wallet. Whether it’s a phishing email, a fake charity, or a get-rich-quick scheme, scams can be costly and devastating. To avoid this, be wary of unsolicited emails, phone calls, or messages, and never give out personal information or send money to someone you don’t know.

Neglecting Your Health:

Neglecting your health is another habit that can drain your wallet. When you don’t take care of yourself, you may be more prone to illnesses and medical expenses. To avoid this, prioritize your health by eating well, exercising regularly, and getting enough rest.

Not Insuring Yourself:

Not insuring yourself is another habit that can drain your wallet. Whether it’s health insurance, car insurance, or home insurance, not having adequate coverage can leave you vulnerable to unexpected expenses. To avoid this, make sure you have the proper insurance coverage for your needs.

Not Asking for Help:

Not asking for help is another habit that can drain your wallet. Whether it’s seeking the advice of a financial advisor, asking for help from friends and family, or seeking assistance from a charitable organization, there are many resources available to help you manage your finances. To avoid this, don’t be afraid to reach out for help when you need it.

In conclusion, wealth creation is indeed about money management, and avoiding these 20 habits that drain our wallet is essential for achieving financial success. By breaking these habits and adopting healthier financial behaviors, such as saving more, spending less, and investing wisely, you can take control of your finances and build a brighter financial future for yourself and your family. It may take time and effort, but the rewards of financial security and independence are well worth the journey. So start today, and make the small changes that will lead to big results over time.

About Steve Biko Wafula

Steve Biko is the CEO OF Soko Directory and the founder of Hidalgo Group of Companies. Steve is currently developing his career in law, finance, entrepreneurship and digital consultancy; and has been implementing consultancy assignments for client organizations comprising of trainings besides capacity building in entrepreneurial matters. He can be reached on: +254 20 510 1124 or Email: info@sokodirectory.com