Money Smarts Blog

5 bad money habits you need to break

Aug 17, 2022 || Arazi Love, Universal Member Services Representative

Piggy bank with money coming out

As an adult, I’ve been lucky enough to treat myself to what some might consider luxuries: new cars, new iPhones, things like that. But to enjoy these things, I haven’t always used my money wisely.

Let me give you a quick example. I used to get my nails done at the salon every two weeks. Sure, my nails were on point — but my bank account wasn’t so lucky. I was easily spending $750+ each year on something I could’ve done at home with an $8 bottle of polish. Too often, I was left wondering: Where’d all my money go?

If you’re turning out empty pockets at the end of the month too, you’ve probably fallen into some of the same money traps. Here are 5 common mistakes that can keep you broke … and how to avoid them.

1. Living on borrowed money. Credit cards are a great way to establish your financial history. But studies consistently show that people tend to spend more when they swipe with plastic, not to mention rack up even more debt if they don’t pay off their balance every month (interest is sneaky). While you’re trying to learn better money habits, avoid credit cards and opt for cash. That way, you can only spend what you have.

2. Living beyond your means. Whether you’re spending money on frivolous things to “keep up with the Joneses” or your income’s been reduced but your spending habits haven’t changed … you’re living beyond your means. If you’ve found yourself in unnecessary debt, prioritize living within your means. Be more frugal. Clip coupons. Cancel memberships and subscriptions you don’t use. It won’t happen overnight, but a little time and dedication is essential to change your finances for the better.

3. Always buying brand new cars. My husband and I like … okay, love our cars. But a nice, new car usually means a nice, big payment! At one point, we were paying $1,720 each month on his shiny new truck and my brand-spanking-new Jeep. We struggled so hard to make those monthly payments and had no extra money to really do anything else. What were we thinking?! We’ve since learned you can absolutely find quality used cars with a smaller price tag, which also brings smaller payments. It’s a win-win.

4. Not investing in your future. If you’re young, you probably think you have all the time in the world to build up your nest egg. Truth is, if you miss out on investing early, you lose out on something called compound interest, which helps your money grow faster because you’re earning returns on the money you invest as well as on returns at the end of every compounding period. It’s one of the most powerful financial tools at your disposal.

5. Not budgeting. When you don’t have a budget, you don’t have control of your financial situation. If you’re not tracking what you make vs. what you spend, how will you ever reach your goals? A simple budgeting framework is 50/30/20 rule, which allows 50% of your income for needs, 30% for wants and 20% for savings and/or debt repayment. Get started with our handy Budget Resource Guide

Everyone deals with money in some form every day, and if you don’t take control of your finances, that stress can be crippling. Luckily, there are resources available. IHMVCU is proud to partner with GreenPath Financial Wellness, an organization that can help you create personalized solutions and plans for everything from creating a savings plan to avoiding foreclosure. Learn more by visiting  

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