People who have no money management skills often display these 8 habits

Ethan Sterling by Ethan Sterling | August 12, 2024, 11:10 am

When you see someone splurging on a shopping spree, you’d think they’re well-off. Spot someone always eating out, and you’d guess they’re financially secure.

But things are rarely that straightforward. Often, these habits are signs of people who lack money management skills.

It’s not always easy to spot, but certain habits give it away. Let me tell you about these specific 8 habits that are often displayed by those who aren’t so savvy with their finances – it’s simpler than you’d think.

1) Spontaneous splurges

Isn’t it amazing when you just can’t resist that new pair of shoes, or the latest smartphone, even when your wallet says otherwise?

These impulsive purchases are usually the first sign of poor money management.

It’s like a siren’s call – luring, irresistible, and ultimately destructive.

But it’s not just about the big, flashy items.

It’s also about the small, seemingly inconsequential daily expenses that add up over time.

Like that daily latte from your favorite coffee shop? Or those regular takeouts because cooking seems too tedious?

Before you know it, your bank account is empty, and you’re left wondering where all your money disappeared.

If you often find yourself on a buying spree without a care for your budget, then my friend, you might need to take a closer look at your money management skills.

Sounds familiar? Don’t worry, you’re not alone.

2) Ignoring the budget

Ah, budgeting, our old friend. We know it’s important, but we just can’t seem to stick to it, right?

I remember a time when I thought budgeting was for the ‘too careful’ or the ‘too serious.’

I enjoyed living in the moment – if I had money, why not spend it?

So, I continued my merry ways, dining at fancy restaurants, buying the latest gadgets without a second thought.

But soon enough, the inevitable happened.

One day, I found myself in a financial bind. My rent was due, and my bank account was embarrassingly low.

That’s when I realized – ignoring my budget was a grave mistake.

If you’ve been avoiding that spreadsheet or app that helps you manage your expenses, it’s time to face it head-on.

Ignoring your budget could be a sign you’re struggling with money management.

Trust me; been there done that. It’s not something you want to experience.

3) Paying only the minimum on credit cards

You know what’s a never-ending cycle? Paying just the minimum amount on your credit card bills.

It may seem like you’re keeping up with your payments, but in reality, you’re just prolonging your debt.

And here’s the kicker – that interest you’re accumulating? It’s compounding.

With compound interest, you’re not just paying interest on the principal amount but also on the accumulated interest.

So, your debt keeps snowballing, and before you know it, it’s a mountain you can’t climb.

As Warren Buffett wisely noted, “The most important thing to do if you find yourself in a hole is to stop digging.”

If you find yourself stuck in this cycle of paying only the minimum amount on your credit card bills, it’s a clear sign of lacking money management skills.

It might seem manageable initially, but in the long run, it’s like a financial quicksand that pulls you deeper into debt. Not a pretty picture, is it?

4) Neglecting savings

When I was younger, I used to think, “Why save when I can enjoy my money now?”

But one thing I’ve learnt over time is that savings aren’t just for a rainy day; they’re your ticket to financial freedom.

If you’re like how I used to be, pushing savings to the bottom of your financial priorities, it’s a telltale sign of weak money management skills.

As the billionaire puts it: “Do not save what is left after spending, but spend what is left after saving.”

I’ve seen so often how an unexpected expense can send people into a financial frenzy. The stress, the worry – it’s not worth it. 

Learning to prioritize savings was a game-changer for me.

It gave me a sense of control over my finances and peace of mind knowing I had a safety net.

If you’re neglecting your savings, it’s time to rethink your financial habits. Trust me on this one – future you will thank you.

5) Living paycheck to paycheck

When your monthly expenses eat up your entire paycheck, leaving you with nothing to save or invest, you’re living paycheck to paycheck.

It’s a precarious financial situation, where unexpected expenses like medical emergencies or car repairs can throw you off balance, plunging you into a financial crisis.

If you’re constantly waiting for that next paycheck to meet your expenses, it’s a big red flag.

It indicates that your money management skills need some serious work.

Having a financial buffer is crucial. Without it, it’s like walking on a tightrope with no safety net below.

One misstep, and it could lead to a hard fall.

And let me tell you, it’s not a comfortable way to live.

6) Avoiding financial discussions

You’d think that someone struggling with money management would want to talk about it, right? Surprisingly, it’s often the opposite.

Many people with poor money management skills tend to avoid financial conversations like the plague.

Whether it’s about their own finances or general financial topics, they steer clear.

This avoidance is usually driven by a sense of embarrassment or fear of judgment.

It’s like the old saying goes, “What you resist, persists.” But in reality, these conversations can be incredibly insightful and even liberating.

If you find yourself dodging discussions about money, it might be a red flag that your financial habits need some attention.

After all, a good chat about finances can provide just the perspective you need to start making better decisions.

So, instead of shying away from these talks, embrace them. Who knows? You might just unlock the key to better financial health.

7) No financial goals

Imagine setting off on a journey without a destination in mind. Sounds adventurous, but you’d likely end up lost, right?

The same applies to your finances. Without clear financial goals, you’re basically sailing in uncharted waters.

People with poor money management skills often lack specific financial goals.

They might have a vague idea of wanting to “save more” or “spend less,” but without clear, measurable objectives, these ideas rarely translate into action.

As Yogi Berra famously quipped, “If you don’t know where you are going, you’ll end up someplace else.”

Setting financial goals gives you something to strive for and helps guide your spending and saving decisions.

So, set that destination and start your journey towards better financial management.

8) Lack of financial education

The root of all these habits? More often than not, it’s a lack of financial education.

If you don’t know how to manage your money, how can you expect to do it effectively?

People with poor money management skills often have a limited understanding of basic financial concepts like interest rates, budgeting, or investment strategies.

If you’re struggling with your finances and don’t know where to start,

educating yourself about money could be the game-changer you need.

Knowledge is power, especially when it comes to managing your hard-earned money.

Financial literacy isn’t about amassing wealth or becoming a Wall Street wizard.

It’s about understanding the value of money, the importance of saving, investing, and making informed decisions about your finances.

And here’s the good news – financial literacy isn’t an innate trait. It’s a learned skill.

No matter where you are on your financial journey, it’s never too late to learn and improve.