I’ve seen this scenario too many times. Someone grinds away at their job, logs endless hours, and yet, at the end of the month (or sometimes even the middle), they’re left scratching their head, wondering where it all went wrong financially.
I used to think working harder automatically translated to making more and keeping more. Turns out, that’s not always the case.
It’s not just about how much you earn, but also how you manage (or mismanage) your money.
Today, I want to walk you through seven money habits that can keep people stuck in a paycheck-to-paycheck loop, no matter how grueling their work schedule is.
Are you making any of these mistakes?
Let’s find out.
1. They live on credit and ignore interest
Credit cards can be useful—no question there. However, a problem arises when people regularly spend more than they can pay off each month. Before they know it, they’re drowning in high-interest debt.
I learned this lesson the hard way in my 20s. I was scaling my first startup and thought a little “business expense” here and there was no big deal. Next thing I knew, I was funneling too much revenue into covering monthly credit card interest. My actual savings? Practically nonexistent.
As Warren Buffett has famously said, “If you buy things you do not need, soon you will have to sell things you need.” That’s particularly true if you’re living on credit, because eventually, you have to pay the piper. And credit interest isn’t cheap.
Ignoring your interest rates is like leaving the tap running all night. You might not see the immediate flood, but trust me—it’s coming.
2. They never track their spending
Ever wonder where all that extra cash disappeared? If you don’t track your spending, it’s pretty much guaranteed that money will slip through your fingers.
I’ve mentioned this before but it’s worth repeating: knowledge is power. When you actually record your expenses—every latte, digital subscription, and grocery store impulse buy—you get a reality check.
I once worked with a friend who couldn’t figure out why she was always broke. It turned out she was spending triple her estimate on dining out. Triple!
This point is backed by experts like Charlie Munger, who has noted that rational decision-making starts with clear facts. And facts about our finances begin with actually knowing where every dollar is going. If you don’t keep tabs, you’re likely to end up with mystery drains in your budget.
3. They neglect emergency savings
According to a 2018 Federal Reserve study, around 40% of Americans wouldn’t be able to cover a $400 emergency without borrowing money or selling something. That stat is shocking, but not surprising.
Working hard yet not setting aside funds for unexpected setbacks—like a car repair or a sudden medical bill—can quickly spiral into a full-on financial crisis. In my early entrepreneurial days, my biggest mistakes weren’t about missing big revenue goals; they were about not preparing for the unplanned.
When cash flow dipped (as it inevitably does in any business), I had no cushion. It forced me to make panic-driven decisions.
If your financial plan counts on perfect conditions, you’re setting yourself up for trouble. Life isn’t perfect. It’s unpredictable. Having at least a small emergency fund can be the difference between a minor bump in the road and a total meltdown.
4. They dismiss learning opportunities about money
One thing I’ve noticed among people who stay perpetually broke is a surprising unwillingness to learn. They might be geniuses at their job, but when it comes to personal finance—budgeting, investing, or even negotiating a salary—they refuse to dig deeper.
We live in the age of infinite information. There are podcasts, books, free online courses. Cal Newport, known for his work on “deep work,” suggests constant learning is crucial for staying relevant and competitive.
It’s no different for money management. If you never expand your financial knowledge, you’ll be stuck making the same poor decisions year after year.
Personally, when I started reading more about money, I stumbled upon Ray Dalio’s principles on understanding market cycles and personal finance. I’m no hedge fund manager (and I’m guessing you aren’t either), but the basic lessons apply to anyone: knowledge is the best hedge against bad financial judgment.
5. They fail to distinguish “wants” from “needs”
It’s easy to justify that fancy new gadget or the daily specialty coffee when you feel like you’ve “earned it.” Especially if you’re working insane hours. But the line between wants and needs can get really blurry if you’re not careful.
A few years back, a buddy of mine was consistently crying broke, all while flaunting the latest phone models and splurging on weekend getaways. Sure, these things can be fun, but they were costing him way more than he admitted. Then he’d wonder why his savings never grew.
Greg McKeown, author of Essentialism, put it this way: “If you don’t prioritize your life, someone else will.” That goes for money too. If you don’t clearly define what’s essential and what’s just nice-to-have, you’ll wind up investing your resources in things that don’t matter in the long run.
6. They surround themselves with bad influences
I know this one might sound cliché, but hear me out. If your closest circle is always out blowing money, complaining about how broke they are, and giving you terrible financial advice (“Just put it on a credit card, you can worry about it later!”), it’s going to rub off on you.
This dynamic is something Jordan Peterson has touched on when he talks about how our social circles impact our behaviors and self-improvement journeys. If your friends aren’t striving for better financial habits, you’ll find it much harder to stay on track.
One of my old college roommates loved throwing spontaneous parties. That was fun—until it wasn’t. We’d spend way too much on everything from food to random decorations, simply because “everyone else was doing it.” Let’s just say, both of us stayed pretty broke back then.
If you want to break out of poor financial habits, you might have to be the trailblazer in your group, or even find a new network that understands the importance of good money sense.
7. They deny the power of small consistent actions
There’s this belief that you have to make huge sacrifices or massive leaps to improve your financial situation. But the truth is, small consistent actions often pave the way to lasting change.
James Clear, in Atomic Habits, wrote: “You do not rise to the level of your goals, you fall to the level of your systems.” That line really stuck with me.
In a financial context, it means you can set the biggest savings goal in the world, but if your daily and weekly habits are out of whack (like not sticking to a budget, or never reviewing your bills), you’ll struggle to get anywhere.
I used to think I needed to secure a massive new client or land a major deal to fix my finances. Sometimes that kind of big break does happen, but it’s rare—and it’s certainly not something you can rely on.
What makes a real, measurable difference is diligently saving a portion of each paycheck, reviewing my subscriptions and cancelling what I don’t need, and putting aside a little extra whenever I can. Those micro-actions compound over time.
Wrapping things up, but it’s still a big deal…
None of these habits are new, yet they’re surprisingly common among people who never seem to break the cycle of financial strain.
It’s easy to blame external factors—low-paying jobs, high cost of living, bad luck—but sometimes the real culprit is how we handle what we earn.
If we’re not conscious about interest rates, refuse to track our spending, ignore the need for an emergency fund, shy away from financial education, blur the line between wants and needs, stay stuck in a circle of unhelpful influences, and never focus on small daily improvements—well, it’s pretty obvious why we can end up broke year after year.
The good news is that every single one of these habits can be changed. Sure, it takes effort. But that’s what growth is all about, isn’t it?
If you see yourself in any of these points, don’t freak out or beat yourself up. Instead, pick one area to start improving, then tackle the next. Over time, you’ll be surprised at how quickly your finances shift.
Until next time, friends
Feeling stuck in self-doubt?
Stop trying to fix yourself and start embracing who you are. Join the free 7-day self-discovery challenge and learn how to transform negative emotions into personal growth.
