How to Stop Bad Spending Habits That Make You Look Poor

At some point in your life or even now you have had at least one bad spending habit. My bad spending habits started in college when I was approved for my first credit card. This type of behavior leads to unnecessary debt and can lead to financial crises such as bad credit, collections, judgments or wage garnishments. 

These habits can be inherited from parents, relatives, siblings or friends. These habits usually start or are implanted in your subconscious as a child and stay with you throughout adulthood.

Determine where the bad spending habits started. Stop these bad habits now will save you time, money and stress in the future.  

Examples of bad spending habits are: overspending or spending more than you earn, impulse or emotional shopping, using payday loans or check-caused stores, using money orders instead of writing checks or using online banking; talking about your purchases and the cost.  Here are x way to stop bad spending habits that make you look poor. 

RECORD SPENDING HABITS

To stop bad spending habits write down your daily spending on paper and pen, Word or Excel or use a smartphone app. Assess your spending each week to determine areas where you can reduce spending. 

Create a budget to track spending or use a budget app. Create realistic financial goals to help you stay on track with your spending. Go on a 30 day spending fast. Stop charging and buy only basic necessities.

Use voice recording, set alerts or reminders when bills are due and any other tasks to help you eliminate your bad spending habits. Seek professional therapy to help change your mindset. 

DO RESEARCH

Comparison shop to obtain at least 3 price quotes to find the best deal. Search online and on social medial sites for discounts and specials. Sign up for email or text alerts. Use comparison sites like Amazon, Bizrate and Price Grabber or smartphone apps like BuyVia or RedLaser.

SET REMINDERS

Sign up for email or text alerts about coupons, discounts or specials on item your regularly purchase. Use cash back or rewards points earned to make purchases.

PAY LESS

You no longer have to pay full price for any item. You can comparison shop, ask for price matching or negotiate to obtain a lower price.  Reduce temptation when shopping and leave your debit card or check card at home.

Are You Addicted to Debt

Are you addicted to debt? I used to be.  I was a shopaholic. I could not go into a store without buying something - a pack of gum, candy, candles, a pair of socks, I had to buy something.  After some years I later realized I was trying to fill a void.  It can be difficult to realize that you are addicted to debt; many people ignore the signs or are in denial.  You have to identify the root cause of the problem which usually stems from childhood or a traumatic experience.   Once you admit you have a problem and examine the cause, and then you can begin eliminating the bad behavior. 

It is easy for Americans to get in debt because America was founded on debt.  During the American Revolutionary War debt grew to $75,463,476.52 by January 1, 1791. The American debt reached $1 billion in 1863. Between 1980 and 1990 the debt reached approximately $780 billion.  Debt surrounds us.  According to the Federal Reserve, the total household debt at the end of 2010 was approximately $13.4 trillion - which meant consumers owed almost as much debt as the federal government.  According to John Ulzheimer of Credit.com, more credit cards are issued in this country than another country, approximately 700 million.

People get into debt to fill a void in their life such as living paycheck to paycheck, loneliness, anger, poverty, overweight, sadness, depression, etc.  There are many kinds of debt addiction:  shopaholics, emotional spenders, compulsive spenders, gambling addiction, and more.  However, psychologists will disagree and state that being in debt is not an addiction.  I use the term “debt addiction” to highlight the problem with debt.  

If you constantly accumulate debt because you decide you won’t pay the bill, you don’t care about accumulating debt or you accumulate debt because of a negative situation that occurred such as getting laid off, being sick, or losing a loved one, you may be addicted to debt. Those addicted to debt don’t care about the consequences of their purchases, they are only concerned with the temporary instant gratification they feel when making a purchase.  Here are some signs that you are addicted to debt:

1. Do you go shopping with money already set aside to pay a bill?
2. Do you buy an item even if it is not in your size or buy items on sale that you will never use?
3. Is your home filled with unused items you purchased or items that still have the tags on them?
4. Do you pay your bills with a credit card, constantly pay late charges or spend extra money that could be used to pay a debt to buy something else?
5. Do you rationalize your poor spending habits by saying things like "I work hard I deserve it", " I can buy whatever I want", "I just had to have it", "I don't have to answer to you", "I want it now", or "I can buy it with my credit card"?
6. Do you buy items based on how you feel?
7. Do you transfer credit card balances?
8. Do you have a negative balance on your savings or checking account?
9. Do you live paycheck to paycheck?
10. Do you buy more than you need (home, car, clothes, boat, appliances)?
11. Do you have multiple credit cards which are all maxed out?
12. Do you take out payday loans or cash advances to pay your bills?
    

If you are addicted to debt here are some tips to help you.

1.  Being honest and admit there is a problem.

2. Speak to family and friends so they can offer moral support.
3. Contact a professional.
4. Surround yourself with at least 3 people who are in a better financial situation.
5. Pay your bills first.
6. Get a receipt each time you make a purchase and keep it.
7. Track spending.  Take all of your receipts from your credit card purchases and reconcile the receipts daily, weekly or monthly to see how you are spending your money.   
8. Avoid shopping when you are emotional. 
9. Go to the bank and take out the amount of cash you need for the week.  Once you spend that amount don’t get out any more money or use your credit card unless it is an emergency.

How Men and Women Spend Their Money

                                                         

Results from the FINRA Investor Education National Financial Capability Study revealed that women with low levels of financial literacy knowledge were more likely to engage in bad credit card behaviors such as incurring late fees than men with low levels of financial literacy knowledge.  

However, there were no differences in behavior between men and women with high financial literacy knowledge. Increasing financial literacy knowledge can improve credit card management and reduce or eliminate gender based differences in credit card behavior.

Financial literacy is linked to retirement planning, investing, quick cash methods such as payday loans or cash advances, and generating wealth. A vast understanding of financial literacy improves credit card behavior for men and women.

Women were more likely to carry a balance, pay the minimum payment on their credit cards and be charged a late fee.  Women were less likely to pay their credit card balance in full each month and comparison shop for credit cards.

Women trail behind in finances and usually have low confidence when trying to set and obtain financial goals.  Many women shy away from finances and don’t view managing their finances as a high priority.  Many women focus more on their appearance and spend their money on shopping or entertainment.  Women put other’s needs first and focus on other priorities such as their children, college funding, etc.  However, women must put their needs first especially regarding finances.

The difference in how women view money may be related to how parents and educators teach girls about money.  These girls grow up and continue to use the same lessons they learned about money as a child.  Women are more emotional when it comes to spending.  Women like to spend money on things with little to no value like makeup, clothes, purses, shoes, etc. 

Many women are taught to find a husband who will take care of them which may prevent them from learning about the various aspects of financial literacy such as budgeting, investing, savings, debt management and retirement planning. Many women feel they don’t need to learn about finances because their husband will manage the finances. 

Women have to change the way the think about money and set an example for their daughters and future generations of girls.  If you want to own a home, go on vacations and live a certain lifestyle you have to save, invest and make good financial decisions.

Many women are forced into different roles when a life-changing event occurs.  Many women find themselves unemployed, divorced or widows and didn’t know how to manage their finances.  This can lead to making bad financial decisions based on emotion and mistakes that may take years to recover from.

According to the Prudential and Hearts & Wallets study women feel less confident than men in their understanding of financial products, their ability to make financial decisions and their perception of their current economic standing.

The financial services industry caters to men in the way it presents and discusses information and products.  Women don’t make quick decisions regarding finances and are concerned with long-term results.  Women are not proactive about learning how to manage their finances and take it for granted that they won’t need to learn because their husbands will do it for them.  

Women earn less than men but have longer retirements due to the fact that women live an average of five years longer than men. Women have higher health care costs throughout their lives.  Women should be saving more than men and investing their savings more aggressively to get a strong long-term return that will grow their portfolios.

Women who don’t manage their finances properly directly affect men. If your wife or girlfriend always asks you for money or needs help with her bills, if you provide financial support to your mother because she has little to no savings or retirement or your daughter keeps borrowing money because she can’t pay her bills - this is a direct result not properly manage their finances and lack adequate financial literacy knowledge.

Men are self-directed learners and use the Internet to find out information more than women.  Women tend to rely more on personal networks with friends, family and financial planners, and they take a networking approach to gathering information or get validation. Men and women need to have a strong grasp financial literacy knowledge to help them make sound financial decisions that will improve their lives. 

Finances - Women vs. Men

Results from the FINRA Investor Education National Financial Capability Study revealed that women with low levels of financial literacy knowledge were more likely to engage in bad credit card behaviors such as incurring late fees than men with low levels of financial literacy knowledge.  

However, there were no differences in behavior between men and women with high financial literacy knowledge. Increasing financial literacy knowledge can improve credit card management and reduce or eliminate gender based differences in credit card behavior.

Financial literacy is linked to retirement planning, investing, quick cash methods such as payday loans or cash advances, and generating wealth. A vast understanding of financial literacy improves credit card behavior for men and women.

Women were more likely to carry a balance, pay the minimum payment on their credit cards and be charged a late fee.  Women were less likely to pay their credit card balance in full each month and comparison shop for credit cards.

Women trail behind in finances and usually have low confidence when trying to set and obtain financial goals.  Many women shy away from finances and don’t view managing their finances as a high priority.  Many women focus more on their appearance and spend their money on shopping or entertainment.  Women put other’s needs first and focus on other priorities such as their children, college funding, etc.  However, women must put their needs first especially regarding finances.

The difference in how women view money may be related to how parents and educators teach girls about money.  These girls grow up and continue to use the same lessons they learned about money as a child.  Women are more emotional when it comes to spending.  Women like to spend money on things with little to no value like makeup, clothes, purses, shoes, etc. 

Many women are taught to find a husband who will take care of them which may prevent them from learning about the various aspects of financial literacy such as budgeting, investing, savings, debt management and retirement planning. Many women feel they don’t need to learn about finances because their husband will manage the finances. 

Women have to change the way the think about money and set an example for their daughters and future generations of girls.  If you want to own a home, go on vacations and live a certain lifestyle you have to save, invest and make good financial decisions.

Many women are forced into different roles when a life-changing event occurs.  Many women find themselves unemployed, divorced or widows and didn’t know how to manage their finances.  This can lead to making bad financial decisions based on emotion and mistakes that may take years to recover from.

According to the Prudential and Hearts & Wallets study women feel less confident than men in their understanding of financial products, their ability to make financial decisions and their perception of their current economic standing.

The financial services industry caters to men in the way it presents and discusses information and products.  Women don’t make quick decisions regarding finances and are concerned with long-term results.  Women are not proactive about learning how to manage their finances and take it for granted that they won’t need to learn because their husbands will do it for them.  

Women earn less than men but have longer retirements due to the fact that women live an average of five years longer than men. Women have higher health care costs throughout their lives.  Women should be saving more than men and investing their savings more aggressively to get a strong long-term return that will grow their portfolios.

Women who don’t manage their finances properly directly affect men. If your wife or girlfriend always asks you for money or needs help with her bills, if you provide financial support to your mother because she has little to no savings or retirement or your daughter keeps borrowing money because she can’t pay her bills - this is a direct result not properly manage their finances and lack adequate financial literacy knowledge.

Men are self-directed learners and use the Internet to find out information more than women.  Women tend to rely more on personal networks with friends, family and financial planners, and they take a networking approach to gathering information or get validation. Men and women need to have a strong grasp financial literacy knowledge to help them make sound financial decisions that will improve their lives.