11 Spending Habits That Keep You Poor

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Tired of living paycheck to paycheck?

The fastest way to save more money is to break the spending habits that keep you poor.

If you regularly find yourself spending your entire paycheck — or more — each month, you need to break that habit starting today.

Here are just a few bad spending habits that are keeping you broke:

  • Putting it on credit
  • Buying too much car
  • Unplanned purchases

The only way to build wealth is to spend less than you earn. And ideally much less. Let’s learn how to cut our spending and build better habits.

What Is a Spending Habit?

A spending habit is any consistent trend that shows up in your expenses over time. These habits can be good or bad.

personal capital how to set a budget

If you don’t know your spending habits, you can use a free tool like Personal Capital, or Mint, or other recommended personal finance tools.

These tools will help you track your money easily.

Knowing how you spend your money helps you save. Just knowing where your money is going makes it easier (and more likely) for you to make good decisions with your money.

Consistent good decisions soon become good spending habits. The best way to get rid of bad habits is by creating new good habits in their place.

So what are some bad spending habits?

The Spending Habits That Keep You Poor

1. Spending More Than You Make

This one is at the top of the list for good reason. If you spend as much or more than you make, you will never be able to build wealth.

The first rule: stop spending more than you make.

Do you know how much you make?

Do you know your monthly expenses?

If not, you need a budget. You need to track your finances.

2. Spending Without Awareness

The root of all your financial evils is a lack of awareness. It’s much easier to overspend when you don’t track your money.

There are lots of great tools to help you track your finances and know exactly how much you make, save, and spend.

For a completely free option, I recommend Personal Capital. For other software options to help you build your wealth, check out this list of the best personal finance tools.

Related: Personal Capital How-To and Review

If you don’t currently track your spending, start right now. It’s so easy, and it’s 100% free. There’s nothing to lose and lots to gain.

The benefits of knowing exactly how much you habitually make and spend can’t be overstated.

3. Putting It On Credit

Spending Habits That Keep Your Poor Credit Cards

Living on credit is a dangerous game. And it’s a game that most people lose.

Do you know why the bank gives you a line of credit?

Is it because they’re very kind and they want you to have what you want?


They know that you’re statistically very likely to put too much on your credit card and not be able to pay it off on time. They want your money.

So they offer you money right-now with an absurdly high interest rate with the expectation that you will overestimate how much money you’ll save this month and underestimate how much you will spend.

Living on borrowed cash is like playing with fire. Sooner or later, you’re gonna get burned.

4. Eating at Restaurants

The convenience of not having to cook or wash dishes is killing your budget.

In the article about saving money with groceries, we learned that the cost of convenience is your time.

Is a burger, fries, and a coke worth an hour or more of your time at work?

The buying power of a dollar at the grocery store is about 3.25 times stronger than a dollar spent in a restaurant.

Cutting your spending on restaurants and fast food alone can help you keep a huge amount of dollars in your pocket every month.

5. Subscriptions

Do you think multiple recurring sources of monthly income would be great?

I do. Do you know who else thinks so?

Amazon. Netflix. Spotify. Gyms. Subscription boxes. Dollar Shave Club. Blue Apron.

These businesses are built on having thousands of “small” amounts of regular monthly income.

If we change the word ‘income’ to ‘expenses’, it’s easy to see how quickly subscriptions empty a bank account.

Be selective with subscriptions. Pick a few that you think you can’t do without. Get rid of the rest. Start by getting rid of the subscriptions you don’t use or only use rarely.

One other reason subscriptions can drain your wallet is not because they cost too much, but because they keep you from doing other things that could tangibly improve your life.

If you spend your time watching Netflix, when will you have time to learn another language, or start a side business, or do volunteer work?

6. Buying Too Much Car

Buying expensive cars might be killing your ability to save money.

According to a consumer expenditure report by the Bureau of Labor Statistics (BLS), transportation accounts for about 16% of average American expenses.

Car insurance alone can put a huge hole in your wallet. And when you account for the cost of gas, annual registration, maintenance, and unexpected repairs, your car ends up costing you much more than the price tag.

And if you have a monthly car payment as well, that’s just more money that you can’t save or invest.

Consider taking public transportation if it’s available and drive only when you must. Or buy a car that you can pay for in cash. Your future self will thank you.

Related: Save Money Using Public Transportation

7. Happy Hour

You work hard and you deserve to relax. But too much “happy hour” may leave you in tears at the end of the month.

If you love to go out, socialize with friends, and take advantage of what are (arguably) good deals on food and drinks, then consider building happy hour into your budget.

If you aren’t interested in being extremely specific with your budget, just chunk happy hour in with your fun money.

It would be crazy to suggest that you never go out for happy hour. And it’s equally crazy to spend so much on “cheap” drinks and snacks that you don’t have any money to save or invest.

8. Your Daily Caffeine

Coffee is a beautiful, wonderful thing. I love coffee. I drink it daily.

As far as I’m concerned, not drinking coffee isn’t even an option. But where you purchase it and how much you spend is within your control.

If you like drinking coffee on the go, consider buying a thermos and making your coffee at home. You’ll cover the cost of the thermos with the money you save on coffee after a week or two.

If you work somewhere that provides coffee, consider yourself blessed. Take advantage of a good situation and caffeinate for free.

9. Dressing to the Nines

Have you ever looked in your closet and wondered how on earth you got all of those clothes? All those shoes? All those Members Only jackets?!

If you have a closet full of expensive outfits — possibly ones you never wear — you may need to push pause on purchasing apparel.

The  Bureau of Labor Statistics’ report states the average American spends 3% of all expenses on apparel and personal services. If you’re spending more than that, ask yourself how many clothes you really need and how often you wear what you already have.

If you absolutely must have a full wardrobe, Goodwill and the Salvation Army often carry designer clothes at a huge discount.

10. Unplanned Purchases

Emotional shopping. Impulse buying. Whatever you want to call it, it’s ripping a hole in your pocket.

Did you ever wake up not knowing something even existed, and by the end of the day you owned one or two?

Before buying anything, ask yourself if you need it right this minute. Chances are you just momentarily want it.

Can you do without it? Try giving yourself a few days or a few weeks to see if you still want it, then buy it. Sometimes waiting even a day makes you realize you don’t need it after all.

If you want to have some “fun money” for unplanned purchases, that’s fine. Just build it into your budget.

11. Your Vices

Drinking. Smoking. Rock and roll. Your vices may be slowing you down.

This isn’t a moral argument. It’s a financial one.

I like drinking whiskey. But if I go out for drinks, 3 mixed drinks cost $25 on the low end. Including tip, I’m looking at spending $30. If you count taking a Lyft — safety first — there’s another $15.

For that $45, I could buy a nice bottle of whiskey and make drinks with friends in the comfort of my own home.

I’m not trying to tell you to stop drinking. Or smoking. Or gambling. Or rock and rolling.

I’m just saying that some things aren’t worth the cost.

How to Break Spending Habits

The first step to breaking bad habits is awareness. You must know what things or activities you have a habit of spending too much on.

Start budgeting today.

Start tracking your income and your expenses. If you aren’t tracking your financial situation, you’re asking for trouble.

The first way to break bad spending habits is to know how much you’re earning and how much you’re spending. That’s only possible if you track your expenses.

The Spending Habits of Millionaires

Spending less money is an extremely important step in your path to saving more and living a life of financial freedom. But spending less isn’t the whole story.

You must also maximize how much money you make.

There’s an idea that says the average millionaire has 7 sources of income. Those include wages from a job, dividends from stocks and index funds, cash from a side hustle, and more.

A consistent trait of those who are financially independent is that they spend money and time investing in themselves and their future.

The best way I know to invest in yourself is by building skills and increase your earning potential. It can actually be very affordable to learn new skills that can radically change your life.

I recently read a book called Ultralearning by Scott Young. Scott shares his methods for mastering new skills quickly and efficiently. I highly recommend his book if you’re interested in building skills and increasing your ability to earn more money.

Related: Ultralearning by Scott Young – Book Summary and Review

Building Better Spending Habits

Your current financial situation is a reflection not only of how you spend your money but also how you spend your time.

Pay attention to where you spend your dollars and your days.

To track your finances, I recommend getting started for free with Personal Capital or Mint. They’re both great free tools to help get you on track.

Related: Tiller Money Review: Financial Tracking and Budgeting

Look at how you spend your time. Ask yourself if you have the time to put a few hours a week into learning a new skill. (The answer is probably ‘yes’.) Consider the benefits of building your skills over the next few weeks or months.

The quickest way to save, invest, and earn more is to kick the spending habits that keep you poor.

Focus on building good habits and your bad habits will fall away.


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  1. This article has me thinking that there are many more spending habits that keep us stuck than we realize and by cutting back on these we can preserve a better future for ourselves. I have better spending habits than most and buy things that can be resold later but I do splurge on food sometimes.

    • Jon,

      Lots of “little” bad spending habits add up over time. Everything compounds.

      I’m glad you have good spending habits overall. I think we should all splurge on the things that really bring us joy! We just can’t splurge on everything all the time. As long as you have a budget or at least know how much money you have to spend (after saving) each month, enjoy your meals!

      I’m curious about your process for buying things that can be resold. How do you work that into your plans? I don’t really think of reselling things besides my car and maybe eventually my house.

  2. Thank you so much for this informative post!  I can say for sure my biggest issue is eating out nearly every day.  It’s easy to do that though.  However, the fact that it hits the wallet pretty hard every week is a good reason to stop, but I never knew that spending the money at a store could save that much money!  Thank you for pointing that out!

    • Thanks, Jessie.  I’m glad this helped!

      The number one reason tracking finances is so important is because of what you said: “I never knew…”. It’s crazy how much damage a lack of awareness can cause. And it isn’t really our fault — we aren’t educated properly about finances. And we pick up so many bad habits from family and friends.

  3. Thank you so much for providing links to free software so that anyone can track your spending.  It’s amazing how those little things add up.  I have a friend who suddenly got a bunch of credit cards and she loved going out for meals with family and friends and she would pay for herself and them on credit.  She is now maxed on all of her cards without even realizing it and under a serious financial burden.  Savings aren’t even an option for her now.

    Now (after seeing what happened to my friend), every time I reach for something that I want, I think about, “Do I really NEED this or will it just become another piece of clutter?  How much will I actually use this?”  It really helps with those impulse buys.

    • Thanks for reading and for your comment. It’s a bummer how quickly we can find ourselves in a bad financial situation. Credit cards make it all too easy to overspend. I hate to hear about your friend’s situation. I hope she focuses on paying off her debts as soon as possible.

      I think it’s great that you ask yourself if something you want right now will just become more clutter. I look around my house and I honestly wonder how I have so much stuff — and I’m a bit of a minimalist. Thanks for adding another question to my anti-debt arsenal.

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