When it comes to financial success, habits are everything. While some people seem to thrive with money, others struggle to get ahead, often despite their best efforts. The difference isn’t necessarily income—it’s about the habits that shape how we earn, spend, and save. Bad money habits can keep you stuck in a cycle of debt, stress, and financial instability, no matter how much you make. In this post, we’ll explore the 7 most common money habits that can prevent you from building wealth and how to break free from them.

1. Living Beyond Your Means

One of the most common habits that can keep you broke is consistently spending more than you earn. It’s easy to fall into the trap of lifestyle inflation, especially as your income increases. You might think, “I deserve this” when it comes to buying that new gadget, designer clothes, or eating out every night, but this mentality can be so damaging to your finances.
When your spending habits outpace your income, you end up relying on credit cards or loans to cover the gap, which often leads to accumulating high-interest debt. Over time, this can eat up your savings and prevent you from building wealth. If you’ve been living beyond your means and want to become more intentional with your spending start by tracking your spending and creating a budget. Often, tracking our spending can be a huge wake-up call. Next, pay yourself first by setting aside savings before you spend on non-essentials. Set up a standing order to transfer a percentage of your income over to your savings account. Treat it as any other bill. When we’re stuck in a cycle of spending, it’s easy to lose track of our wants versus our needs. It’s only when we stop spending that we can see what matters to us.

2. Ignoring the Importance of Saving

For many people, saving money seems like a nice-to-have, not a must-do. Whether it’s because of instant gratification or a belief that there’s always time later, neglecting to save is a key habit that keeps people broke. My problem with saving was that I never seemed to have enough money left over after all of my debt repayments. I’d transfer over money into my savings account only to have to transfer it back again a day or two later. But having savings behind you is so important.
Without savings, you’re vulnerable to financial emergencies like home repair bills, car repairs, or job loss. If you don’t have an emergency fund or a retirement savings plan, a single setback can send you into a downward spiral of debt. The key is to start small. Start by building an emergency fund of at least three months’ worth of living expenses. Make saving automatic by setting up a direct deposit into your savings account, and prioritize long-term goals like retirement. The sooner you start, the better. Even just a few pounds a week will get you into the right mindset and build the valuable habit of saving money.

3. Relying on Debt for Everyday Purchases

Using credit to pay for everyday expenses, especially things you can’t afford, is a surefire way to end up in financial trouble. Many people justify using credit cards for routine purchases, thinking they can pay it off later. However, high interest rates on credit cards often make this habit a vicious cycle. And all of these small purchases put on credit really do add up over time and you’ll eventually find yourself with a big monthly bill that will eat into your budget. Putting things on your credit card can quickly become habit, so it’s best to stop it in its tracks.
Make it a rule to only use credit cards if you can pay off the full balance each month. I personally only use my credit card if I am going to earn a decent reward and to purchase large-ticket items to take advantage of the protection a credit card offers. I’ll pay with my credit card and then immediatley pay it off. If you’re carrying debt, focus on paying it off as quickly as possible to minimise interest charges. Avoid using credit for non-essential purchases and create a strategy for tackling your existing debt (like the debt snowball or avalanche method).

4. Not Investing or Ignoring Retirement Planning

Many people don’t start investing because they believe they don’t have enough money to make it worthwhile, or they think it’s too complicated. As a result, they miss out on the opportunity to build wealth through the power of compounding interest. The thing with investing is that you are far better starting off as early as you can, even if this means investing just a small amount each month. Starting off with £20 per month is better than not starting at all. You’ll not likely miss £20 and this £20 will be working away in the background for you. You’ll have started the habit of investing and will find it easier to build on in the coming years. By not prioritising retirement savings, you can leave you financially vulnerable in your later years. So, make it your mission to start today, no matter how small! There is a wealth of information online about investing. It may seem complicated but it really isn’t. Just set up a standing order from your current account to a platform, like vanguard or similar, and invest in something simple like an index fund.

5. Chasing “Get Rich Quick” Schemes

Another habit that can keep people broke is the tendency to fall for “get rich quick” schemes, be it through risky investments, gambling, or social media influencers promising easy money. These schemes often prey on the desire for immediate wealth and financial freedom, but they rarely deliver sustainable results. If you get swept up in all of this, you can lose substantial amounts of money. Instead of looking for shortcuts, focus on building long-term wealth through proven methods like earning more, saving more, and investing. Financial success is a marathon, not a sprint. Resist the temptation to make impulsive decisions based on promises of quick returns.

6. Failing to Set Financial Goals

Without clear financial goals, it’s easy to drift aimlessly and end up spending on things that don’t align with your priorities. Whether it’s saving for a home, starting a business, or retiring early, goals help you stay motivated and on track.
Without goals, your money lacks direction. You may end up spending impulsively, or worse, procrastinating on important financial tasks like building an emergency fund or contributing to retirement.
Set SMART goals (Specific, Measurable, Achievable, Relevant, Time-bound) for your finances. Break them down into actionable steps and track your progress. Whether it’s paying off debt, saving for a down payment, or increasing your income, having a plan in place will help you make more intentional financial decisions. I like to use visual charts to help me achieve my goals. When I was paying off debt, I kept a chart on my fridge and coloured in a block each time I paid off £100. I broke my debt down into £1k chunks to keep me motivated, so each chart had 10 blocks to colour in. I was super motivated to get those blocks coloured in as quickly as possible!

7. Living with Financial Illiteracy

Financial illiteracy is another major barrier to wealth-building. Many people never learn the basics of managing money, like budgeting, saving, investing, or understanding credit. We aren’t taught these basics in school and many of us never learned it from our parents either. This lack of knowledge can result in poor decisions, missed opportunities, and wasted money. If you don’t understand how money works, you’re likely to make costly mistakes or miss out on opportunities to grow your wealth. Without financial literacy, you can’t make informed decisions about your money. So make it your mission to educate yourself on personal finance. There are countless free resources available online—from books and podcasts to courses and blogs—that can help you gain the knowledge needed to manage money effectively. The more you learn, the better equipped you’ll be to make smart financial choices. Listen to money podcasts and surround yourself with people who have a desire to learn and grow too.

Breaking the Cycle

The habits that keep people broke are often ingrained over time, but they’re not impossible to change. By developing a healthier relationship with money, setting clear goals, and adopting better habits, you can break the cycle and begin building a solid financial foundation.

It all starts with small, consistent changes. Start by analysing your own habits, and take one step at a time toward a wealthier future. Remember, your financial success is a reflection of the choices you make every day—so choose wisely.