Bad money habits can feel like a ball and chain, weighing you down and keeping you from living the life you want. Whether it’s impulse spending, unnecessary credit card use, or not saving for a rainy day, many of us fall into traps that harm our financial well-being. The good news is that small changes can make a big difference. Kicking those habits to the curb can greatly improve your financial life. Also read Breaking Bad Habits.
Why It’s So Hard to Change.
Here are six practical tips to help you recognize and eliminate the negative financial habits that are holding you back:
1. Determine the Benefit You’re Receiving From Your Bad Habit
We often stick with bad habits because they give us some sort of emotional payoff. So, before you can fix the problem, it’s important to ask yourself: What am I getting out of this?
Are you spending money to relieve stress or boredom? Do you splurge on take-out because it makes you feel good after a tough day? Maybe you like the thrill of buying something new, even if you don’t need it.
Once you figure out what your bad habit is giving you—whether it’s comfort, a sense of escape, or a way to pass the time—you can start working on ways to replace it with healthier habits.
Example:
Sarah used to shop online whenever she felt stressed at work. She’d buy clothes or gadgets she didn’t really need. She realized that her spending was actually a way to distract herself from her stressful job. Once she saw that connection, she started going for walks instead of reaching for her credit card. She still got a break from her stress, but now it wasn’t costing her anything.
Take Action:
- Ask yourself:
What do I get out of this habit?
- Write it down.
Seeing it on paper can help make it real and easier to tackle.
2. Find a Substitute for Your Bad Habit
Once you’ve figured out the emotional need your bad habit is filling, the next step is to replace it with something healthier. The key is finding a substitute that provides the same benefit without the financial damage.
Examples:
- If you’re spending money to relieve stress, try free or low-cost ways to unwind like exercising, reading, or chatting with a friend. I love to read. Since I am retired, I frequently read an entire book in one day.
- If your bad habit is tied to boredom, pick up a new hobby that doesn’t drain your wallet—like drawing, baking, or learning something online for free.
- If you’re using shopping as a reward, try setting small, non-financial rewards for yourself when you hit milestones, such as taking a relaxing bath or enjoying a favourite meal you make at home.
Take Action:
- Replace that unnecessary purchase with a new activity that costs nothing or very little.
- Keep a list of alternatives that you can turn to when you feel the urge to indulge in your old habit.
3. Understand How the Bad Habit is Harming You
Bad habits often feel harmless in the moment, but over time, they can cause significant harm. Sometimes, it’s easier to ignore the long-term impact because the immediate gratification of indulging feels good. However, taking an honest look at the damage your habit is causing can be the wake-up call you need to make real changes.
Examples of Harmful Effects:
- You’re spending money you don’t have, and it’s pushing you further into debt.
- You’re delaying important financial goals, like saving for retirement, because you’re always living paycheque to paycheque. Read also 9 Easy Steps to Stop Living Paycheque to Paycheque
- Your bad habits may be causing tension in your relationships, especially if you’re hiding purchases or your partner disagrees with your spending.
Take Action:
- Write down a detailed list of the ways your bad habit is affecting your life—financially, emotionally, and even physically.
- Look at this list every day to remind yourself of the reasons you want to change.
For instance, if you’ve been putting off saving, remember that every month you don’t save, you’re delaying your ability to build a secure financial future.
4. Visualize What You’ll Gain by Kicking Your Bad Habit
To keep yourself motivated, it’s important to focus on the positive side of breaking your bad habits. What will your life look like once you’ve replaced your negative financial behaviors with better ones?
Examples of Benefits:
- You’ll have more money saved for emergencies, vacations, or big purchases.
- You’ll have less stress knowing you’re not living beyond your means.
- You’ll feel proud and in control of your finances, which can boost your self-esteem.
- Relationships with family and friends may improve when you’re no longer struggling with financial stress or disagreements.
Take Action:
- Write down a list of all the benefits you’ll gain from changing your financial habits.
- Visualize what your life will look like when you’re no longer burdened by bad money decisions.
- Picture yourself debt-free, with savings in the bank, and the freedom to enjoy the things that truly matter to you.
5. Identify Your Trigger Points
Every bad habit has a trigger—something that makes you more likely to indulge in it. Maybe you spend more money when you’re feeling bored, stressed, or when a certain event rolls around, like a sale or a holiday. The trick is to figure out what sets off your bad habit so you can avoid or manage those triggers.
Common Triggers:
- Emotional triggers:
Stress, boredom, loneliness, or even happiness can lead to unnecessary spending.
- Social triggers:
Going out with friends or family members who encourage or expect spending.
- Environmental triggers:
Being at the mall, browsing online shops, or even seeing an ad on social media.
Take Action:
- Keep a journal for a week or two and note down when you’re most tempted to spend unnecessarily. Write down what’s happening in your life at those moments—are you feeling a certain way? Are you with certain people? Are you in a specific location?
- Once you’ve identified your triggers, think about ways to avoid them. If boredom leads to spending, find ways to fill your free time with inexpensive activities. If social pressure is a trigger, practice saying “no” to outings that don’t align with your financial goals or suggest alternatives that don’t involve spending money.
6. Find Support and Stay Accountable
Changing long-standing habits is tough, but it becomes much easier when you have a support system. Whether it’s a friend, family member, or even an online community, having someone to cheer you on (and hold you accountable) can make a huge difference.
Finding Support:
- Online communities:
There are plenty of forums and social media groups dedicated to personal finance. Many Canadians have found support in online communities where people share tips, successes, and challenges in their financial journeys.
- Local groups:
Some communities have support groups focused on budgeting, debt management, or savings goals. Look for financial literacy programs in your area.
- Family and friends:
Sometimes the best support comes from those closest to us. Share your goals with a friend or family member and ask them to check in with you regularly to see how you’re doing.
Take Action:
- Reach out to someone you trust and ask for their support.
- Consider joining an online or local group to stay motivated and learn from others facing similar challenges.
Take Control of Your Financial Future
Everyone has bad financial habits. Whether it’s spending too much, saving too little, or avoiding the budget altogether, these behaviours can hold you back from reaching your full potential. But the good news is that with some awareness, small changes, and the right support, you can break free from these habits and build a healthier financial future.
Start by understanding why you do what you do, find healthier alternatives, and take concrete steps to stay accountable. Over time, these small shifts can lead to major improvements in your financial well-being, giving you more freedom, less stress, and a brighter future.
Remember, financial habits didn’t form overnight, and they won’t disappear overnight either. But with commitment and persistence, you’ll get there.
So, take the first step today—determine the benefit of your bad habit, and start building a better tomorrow. Your financial freedom is within reach, one small change at a time.
Disclaimer for ManageYourMoney.ca
The information provided on ManageYourMoney.ca is intended for educational and informational purposes only. It should not be taken as financial advice. The opinions shared are those of the authors and are meant to encourage sensible financial habits and decision-making. We recommend that you do your own research or consult a certified financial advisor before making any financial or investment decisions. All investments come with risks, and there is no guarantee of success. Past performance is not a reliable indicator of future results. Always consider your personal financial situation and risk tolerance before pursuing any investment opportunities.
As always, I am not a qualified financial advisor. I just relate financial management to my own experience which may not resemble yours at all. Advice is frequently worth exactly what you paid for it. Most of mine came from expensive experiences.
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