5 Money Habits That Can Ruin You Financially

Why do you buy things you can’t afford? Does it make any sense to you? It’s not rational. Nobody wishes to be in debt.

The answer is simple enough – debt issues are emotional, not rational. Basically, debt comes from unconscious habits and attitudes that encourage you to shell out more than you can actually afford.

Moreover, everyone is familiar with the first law of finance – Always spend less than you make. If followed correctly, you can stay out of debt. Unfortunately, knowing what to do and getting it done are totally two diverse things.

That’s why abiding by these five financial practices is significantly vital for your financial success. These can help you close the gap between What To Do and Getting It Done – merely by allowing you to change your daily habits. Believe it or not, it is the easiest way to counter the issues related to your debt while building wealth.

Well, this means you have the brightest chance to recover from your financial situation regardless of where you stand today. You are the sole creator of your habits, and it is these habits that form your long-term monetary results. This means you hold the charge and have the power to inflict positive changes.

Here are the five financial practices that can ruin your financial situation by taking you to debt. Your habits will decide your financial success or failure.

Emotional Spending

Take a look at the following questions to see whether you fall into the category of an emotional spender or not:

  • Do you feel that shopping is your source of entertainment?
  • Do you feel that shopping relieves your stress or help you escape boredom?
  • Do you take shopping as a treat for any celebration?
  • Are there any clothes in your closet with the tags still attached?
  • Is shopping your way to establish a social connection?
  • Does your credit card bill extend to be non-affordable by the end of the month?
  • Do you feel anxiety, guilt, or remorse after shopping?
  • Do you ever feel a rush while buying something?
  • Do you hide purchases from near and dear ones?

If your answer to any of these questions is “yes”, then there is a strong chance that you are an emotional spender.

Human beings are genetically programmed to follow what makes them feel good, turning their spendings into a habit on a physiological level. This is the reason why over-spending is all about the emotional experience that comes from buying the stuff and not from the stuff itself. The purchase brings momentary yet instant satisfaction even if it leads to debt.

The wealthy habit is to regulate your expenditure based on your needs rather than your wants and stop spontaneous purchases. A reliable way for breaking the habit of emotional spending is to follow a two-day calm down period for all your non-planned purchases so that your emotions can relax. If you still have the urge to buy it after those two days, then it might actually be worth buying.


This is the most dangerous one and it will definitely put you under a huge pile of debt. Entitlement thinking reflects the belief that you deserve all the good things in life, despite your financial statement. It’s ok to have designer clothes, a big-screen TV, mani-pedis and a cool new car. Everyone has them, right?

The good habit is to reach out to only those purchases which you can actually afford to pay right away. The wealthy approach is that you are only entitled to what the balance in your savings account confirms you’ve earned.

Immediate Indulgence

Right next to “Entitlement” is a debtor’s inclination towards Instant Gratification. You want to buy now and are ready to pay on credit, thus drastically increasing the item’s cost.

The wealthy habit is to chase deferred gratification from a 5 to 10 years time horizon instead of choosing instant gratification today. This means that you should pay cash against all purchases in order to lower the cost. This isn’t a sacrifice for an individual with a wealthy mindset because he/she is choosing long-term freedom over instantaneous lifestyle by investing for tomorrow rather spending today.

No Financial Preparation

Debtors separate saving, spending, and earning from each other. There is no decided budget, no retirement plan, no strategy to boost earnings. In other words,  the debtor lives on the edge financially because there is no preparation to follow the approach of doing something different. Many questions are not at all considered, including how to manage medical emergency or a job loss situation. Debt is often the default answer because there was no better option.

The wealthy habit is to treat your personal finances like a business using proper plans and effective actions which are intended to establish a financially secure result. Create reserves for the expected rainy days and cover the risks which you can’t afford to drop. Conduct monthly saving from the earnings for retirement. Financial planning is a wealthy habit.


Nothing speeds up a debt spiral like “Complacency”. This inflicts the debtor’s attitude like this: “I am already in debt, there’s no big deal to spend more? Complacency is clearly a dangerous emotional state of mind as the fulfilling feelings that you experience upon buying are completely detached from the sore feelings which you go through when your credit card bill arrives.

The dilemma is that small impulse purchases, even when trivial, will ultimately add up to a serious debt. You could be able to shake it off for a day or a month, but over an extended period of years, the compounded effect can lead to foreclosure or bankruptcy.

The wealthy habit is to act positively to any warning signs of imminent financial issues. Living paycheck to paycheck, using credit cards excessively to counter living expenses, and stressing over money are all clear-cut signs that you need to take quick and effective actions.


Your habits are the key factors in determining your wealth, health, and happiness. Remember that your debt may look like a financial problem but it is only the symptom. Your habits and actions conclude your debt, and these small actions result in either debt or wealth.

Start your journey to better future, today!