Breaking bad habits can be extremely hard, especially when it comes to spending habits. These bad habits can be difficult to break if you don’t even realize you’re doing them; so take a look at the suggestions below and analyze your own personal situation to see if you can improve in any of these areas:


Emotional spending

Using shopping to deal with life’s ups and downs is common, Gretchen Cliburn, CFP, director of financial planning at BKD Wealth Advisors, says. But emotional impulse spending doesn’t actually fix anything. In fact, it tends to make things worse, she says. That temporary high you get from buying will inevitably wear off, often leaving you with credit card debt or piles of unneeded stuff.

To avoid making impulsive, emotional purchases, set some ground rules for yourself. For instance, buy items only from a wish list that you’ve made at a time of relative calm, not when you’re trying to distract yourself from anxiety or sadness. Or make yourself wait 24 hours before giving in to an unplanned purchase.

It’s also a good idea to opt out of emails from your favorite stores to reduce temptation, and to buy things only when you can pay cash. If necessary, find someone to discuss your goals with and to hold you accountable, Cliburn says.


Comparing your money situation to other people’s

© Deklofenak

© Deklofenak

Many of us measure success by the size of our homes or the cars we drive, but that assumption is just plain false. Big houses and expensive stuff only indicates how some people choose to spend money, not how much they actually have, Cliburn says.

Keeping up with the Joneses can be tempting — if your neighbor can afford that new SUV, you deserve one too, right? But keep in mind that many of your neighbors could be living above their means. Remember that 37 percent of Americans have credit card debt greater than or equal to their emergency savings, according to a Bankrate study.

To avoid living beyond your means, start by determining what’s important to you — just to you — Cliburn says. Set goals for what you want your life to look like in five, 10, 20, and 50 years. Perhaps you want to own a home in a specific neighborhood, or to retire comfortably. “Once you have identified what is most meaningful to you, make spending decisions based on that,” Cliburn says, instead of overspending to live up to someone else’s idea of success.


Spending all your income

Everybody has to pay bills and buy necessities each month, but it’s up to you to decide what to do with the money that’s left over. Choosing to spend it all — as opposed to making saving and investing a priority — can easily become the norm. That often means you have no “rainy day fund” when emergencies crop up, and no secure retirement waiting for you at the end of your career.

When people spend everything they earn, they often don’t have a budget, says Derek Gabrielsen, wealth advisor at Strategic Wealth Partners in Independence, OH. He calls this “the biggest mistake people make.”

Gabrielsen recommends writing up a budget that includes monthly allocations for emergency savings and retirement savings. A good rule of thumb is to aim for six months’ worth of living expenses in your emergency fund and saving at least 10 percent of your income toward retirement. And once you have a spending and savings plan in hand, stick to it. That’s one way to make sure you always reach your goals.


Depending on credit cards



By the end of 2015, Americans’ credit card debt reached about $900 billion, according to CardHub’s analysis of Federal Reserve figures. Contrary to popular belief, carrying a balance on your credit card can lower your credit score, even if you make payments on time. And if you’re making only the minimum payments each month, your credit score will keep suffering because your credit report will show unpaid balances every month.

Plus, when you make just the minimum payment it takes years to pay off your debt. Factor in interest and you’re paying way more than the initial sticker price for those purchases.

If you’ve become accustomed to living with credit card debt, take some time to understand exactly what you’re doing with your money. Read the fine print on your next credit card statement — particularly the section that shows how much you’ll end up paying if you simply pay the minimum payment every month. You may be shocked to see how expensive credit really is.

To break the cycle, stop using credit cards immediately. Set a strict budget and use the snowball method to strategically pay off your debts. If you need help, consider contacting the National Foundation for Credit Counseling, a nonprofit group that specializes in helping people get out of debt.


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