9 Subtle Money Habits That Will Lead to Debt

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9 Subtle Money Habits That Will Lead to Debt

We all know the recipe for strong finances: earn more money, save more money, and spend less money. But those are the big players; they aren’t the small, subtle, everyday money habits that will lead to debt and get many people in trouble. They aren’t the ones that will sneak up on you and before you know it, you’re drowning in debt.

The following patterns will land you in big financial trouble if you don’t recognize them for what they are and get ahold of them before they start pulling you down. By steering clear of these things, you’ll set yourself up for financial success.

Impulse spending. In one 2014 study, 3 out of 4 adults who were surveyed admitted to shopping on an impulse. The main reasons they revealed were: purchases made from excitement, buying something out of boredom, shopping when sad or upset, decisions made out of anger, or poor choices while intoxicated.[1]

Purchases made on a whim occasionally are one thing, but when done repeatedly, will cause major financial woes down the road.

Embracing lifestyle inflation. As you advance in your career, you will undoubtedly begin earning more and more through raises, bonuses, and new jobs. It’s all too easy to inflate your lifestyle to match your higher income, but this can get you in trouble. Before you know it, your lifestyles will inflate past your income. Instead, commit to setting a percentage aside in savings each time your income goes up.

Making minimum debt payments. Your debt accrues interest and interest can be a dangerous thing. By simply paying the minimum on debt every month, you will never become debt free. It will continue to build and build until one day your finances are absolutely drowning.

Not committing to a budget. One poll found that only 1 in 3 Americans keep a monthly budget.[1] Budgets may sound boring, but not having one is the easiest way to land yourself in trouble. While you assume you can afford a purchase, a budget would actually tell you otherwise. If you want to stay out of debt, establish a budget and keep track of your spending.

Dining out. Recently the Commerce Department revealed that in 2015, for the first time in history, restaurant and bar sales outflanked grocery store sales.[1] That means more people are dining out than saving money by eating at home. Going out too often is an easy way for debt to start quietly creeping in.

Justifying purchases. If you have to defend a purchase it typically means you shouldn’t have made it to begin with. If you’re too often coming up with excuses for buying something, other than needing it, you might want to reconsider your spending habits.

Chronic bargain shopping. Everybody loves a good deal. But bargain hunting actually becomes a problem when you’re buying things you otherwise wouldn’t simply because they’re discounted. If you find yourself considering your 27th white t-shirt because it’s been drastically reduced in price, put it down and step away from the clearance section immediately.

Ignoring your finances. You shouldn’t be afraid to look at your bank account. In fact, you should spend time every week familiarizing yourself with your financial position and making sure everything is on track. If the thought of your unbalanced checkbook has you afraid, you could be headed for trouble.

Spending before having. This is called “if-come” and it’s income that you plan on before you even make it. Many people have their Christmas bonus mentally spent in November and their tax refund is as good as gone by December. If you want to plan for this type of money, determine to invest it or save it, don’t spend it.

These are just some of the very subtle money habits that will lead to debt and signs that your finances have started heading south. Every person is different, but by becoming more aware of certain habits, you’ll be more likely to enjoy financial security. What are some of the ways you’ve noticed debt to start creeping in? What do you do to stay on track?


[1] Johnson, H. (2015). Six habits that can land you deep in debt. Accessed November 27, 2015. Retrieved from http://www.thesimpledollar.com/six-habits-that-can-land-you-deep-in-debt/

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