5 Reasons You’re Bad With Money

5 Reasons You’re Bad With Money " A lot of us have hang ups about money. We didn’t learn how to manage our finances in school and our parents might have taught us bad habits. We simply don’t even know how to navigate the space. As they say, the first step is admitting you have […]

A lot of us have hang ups about money. We didn’t learn how to manage our finances in school and our parents might have taught us bad habits. We simply don’t even know how to navigate the space. As they say, the first step is admitting you have a problem. If you fall into the trap of any the bad habits below, we’re going to walk through how we can change your behavior and get you closer to financial freedom!


1. You Don’t Know What You Spend Your Money On (Budget)

If at the end of every month, you have no idea where your money has gone: you have a problem. If you look at your credit card statement and are surprised about the number of coffees you bought: you have a problem.

I had an accounting teacher who once said, “What doesn’t get measured, doesn’t get noticed.” Basically, if you don’t monitor your finances, you won’t notice how much you’re actually spending, which automatically puts you in a financial awareness hole.

I had a come to Jesus moment when I looked through all of my transactions in 2018 during New Year’s in 2019. Yes, I knew that I spent too much on food, but I didn’t know how bad my spending truly was until I looked at those transactions. I was spending double what I wanted to spend on food every month. And while I like to be kind to myself and give myself a little wiggle room with my budget, I was apparently giving myself wiggle room almost every day.

I literally started ugly laughing when I saw those transactions. But looking at the transactions was the catalyst for me to change my behavior. Now, I stay within my monthly food budget ($250) while doing all of my grocery shopping at Whole Foods and getting Uber Eats multiple times a month. Yes, you can splurge on a budget.

Looking at what you’re spending money on and adjusting your spending is the first step of budgeting and getting closer to financial freedom.

Learn more about budgeting here:

2. You Don’t Pay Down Your Credit Card Balance Every Month (Paying Debt)

This mistake is a cardinal sin. Simply put, if you can’t pay down the balance of your credit card every month, don’t have a credit card. The interest credit card companies charge is highway robbery.

But, if you pay down your balance every month, you get so many benefits from having a credit card. Particularly, you will spend less money a month if your credit card has cash back. I don’t care if you get only $5 cash back. That’s a $5 discount you got from using your credit card.

You see that if you use your credit card correctly, you are making out like a bandit, while others who don’t pay off their balance every month are getting screwed.

I understand using your credit card for absolute emergencies, but pull out your debit card if you can’t stop yourself from spending more than you actually have. Credit cards should only be used for purchases that you could pay with your debit card without your debit card balance going into the negative.

Learn more about credit cards here:

3. You Pay the Minimum Payment on Your Student Loans (Paying Debt)

Just like credit card interest will bite you, student loan interest will bite you in the long run. Check your interest rates because you probably have rates that are at least 4% on average. No, this is not as high as a credit card interest rate (and that’s why you should always tackle credit card debt before student loan debt), but over time that interest will pile up.

Say you currently have $10,000 in student loans at an average interest rate of 5%. You have 10 years to pay off the loan and thus your minimum payment is $106.07. Not bad. That is until you realize that not only will you have to pay back that $10,000, you’ll also be paying $2,727.86 to the bank.

I had to take a step back from writing because that fact is literally pissing me off. Like I’m actually annoyed.

But listen: if you make just a $50 extra payment every month, you’ll pay $1,657.47 in interest. If you amp it up to a $150 extra monthly payment, you’ll pay $937.08 in interest. And if you really push it and do a $250 extra monthly payment, you’ll only pay $657.35 in interest.

And bonus: you’ll pay off your loans faster — in 6 years and 3 months ($50 extra payment), 3 years and 7 months ($150), and 2 1/2 years ($250).

Don’t you want to be debt-free quicker? And not pay as much money to the bank? Try to pay more on your student loan balance that is within your means.

Learn more about student loan payments here:

4. You Don’t Have an Emergency Fund (Saving)

As a child of the Great Recession, I quickly realized the importance of a savings account. You just never know what’s going to happen in life — your car battery dies after a long day of work (happened to me) or you go to the dentist and they tell you you need a cavity filling (also happened to me).

It’s always wise in life to take precautions before the danger actually strikes. But even though we all know in our hearts that an emergency fund is important, we’re still not funding one for at least 3 – 6 months of expenses.

According to Money Under 30, 1/4 of Americans have no emergency savings whatsoever and 1/4 of Americans have at least 6 months of emergency savings. What group do you want to be in? In the stressed out group that has no savings and realizes that she doesn’t have enough money to buy tampons (yep, been there before)?

You know that it makes sense to have an emergency savings, so do it. Make it a habit to contribute money every month to emergency savings, no matter how little the amount.

Learn more about saving here:

5. You’re Scared of Investing (Investing)

This sin amongst the other four sins we talked about seems harmless. You might think this sin is the equivalent to a little white lie. And you know what, it might well be. But what do we call someone who says little white lies all day every day — a pathological liar.

Not investing right now is not that bad, but if you never invest, oh boy are you missing out on something great. You need to take advantage of what Albert Einstein called the 8th wonder of the world: compound interest.

The crazy part about compound interest is that you don’t need to invest that much to see major rewards. If I invest in $6,000 every year in my Roth IRA (retirement account) for 35 years, I’ll have $1.06 MILLION in the bank at retirement. Y’all, this isn’t a joke. You literally can put $500 away a month for 35 years and become a millionaire with ease and without thinking about it.

Recognize that this strategy is not risky. People have it in their minds that investments are risky. Yes, there’s some risk involved but if you look at the data, the stock market, housing market, and economy have consistently increased over the long haul.

Learn more about investing here:


This post contains content this is for informational purposes only, and should not be considered legal or financial advice. You should consult with a legal professional and financial professional to determine what may be best for your individual needs. Please read my Disclaimer for more information.

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