Bad money habits can make it hard to find your footing when it comes to personal finance. Avoid these bad habits and build new ones in their place in order to set yourself up for success.

It can be tough to get a good handle on your finances, especially when you’re first starting out in your career or just don’t have a lot of cash to spare. Throw in student loan debt, a worldwide pandemic, and growing economic uncertainty, and it can seem especially daunting to get your financial situation on the right track.

Luckily, there are a few bad money habits that you can break that will make getting your finances in order easier. While there are many aspects of your financial situation that you can’t control, getting rid of bad money habits and forming new, responsible habits when it comes to spending and borrowing can set you up for success.

1. Spending More than You Earn

22 Bad Money Habits Every Millennial Should Put Behind Them - Spending more than you earn

How much you spend vs. how much you earn is one of the key factors that can make or break your financial health. You should always aim to spend less than you make each month, with the goal of saving 20% of your income each month.

While this sounds simple enough, life can get in the way sometimes, whether you have a couple of unexpected expenses that tank your budget, you lose a source of income, or you just don’t quite make enough to meet your basic needs each month. Even if you find yourself unable to spend less than you make right now, earning more money than you spend should always be your ultimate goal when it comes to setting your finances in order.

2. Living above Your Means

Living above your means can put a serious dent in your finances if you aren’t careful. While you probably don’t need to be frugal to the extreme, you should steer clear of expensive and unnecessary purchases like new cars, luxury apartments, and fancy vacations if you’re still trying to get your financial footing. This doesn’t mean you can’t treat yourself every once in a while, but it does mean you should make it work within your budget.

3. Not Sticking to a Budget

How do you know how much you can spend each month while still living within your means? The easiest way to do so is to make (and stick to) a budget.

You should include necessities like housing, utilities, groceries, and insurance, and may want to add categories for saving and discretionary “fun” spending each month if your budget allows.

Not sure where to start? Budgeting software like PocketSmith makes budgeting easy and painless.

4. Not Tracking Spending

After you set a budget, the next step is to track your spending each month to make sure that you’re sticking to it. Tracking spending can help you to make sure that you’re not going over budget in any one area. It also helps you to keep track of your finances and get a clear-eyed view of what you spend your hard-earned money on.

5. Not Educating Yourself about Personal Finance

22 Bad Money Habits Every Millennial Should Put Behind Them - Not educating yourself about personal finance

The world of personal finance can be full of jargon and terms that are confusing for beginners. I had never studied business or accounting and found many financial terms frustratingly opaque when I first started to learn more about personal finance.

Unfortunately, poor financial literacy can have negative consequences when it comes to your financial wellbeing. Knowing enough about personal finance to make responsible and educated decisions when it comes to money is really important. Luckily, there are plenty of free resources online (including the articles here at Money Under 30!) to get you started.

6. Not Building up an Emergency Fund

A sizable safety net is another cornerstone of good financial health. After you’ve set a budget and begun to track your spending each month, you should start to put money away each month towards an emergency fund.

Most financial experts recommend that you save between three and six months worth of expenses in an emergency fund. If you’re not sure exactly how much to save, you can use MU30’s emergency fund calculator to figure it out.

7. Not Saving for Retirement

Once you’ve established a budget and stashed away some money for an emergency fund, the next step on your path to financial wellness should be to start saving for retirement. This is especially important if your employer matches retirement contributions since you’re basically leaving free money on the table if you don’t contribute up to their match limit.

If your employer doesn’t offer any retirement savings options, you can contribute to a traditional or Roth IRA (the contribution limit is $6,000 in 2020.) Once you’ve maxed out your retirement contributions for the year, you can save or invest any additional cash that’s leftover.

If you’re not sure how much you should be saving, MU30’s investment calculator can help you plan your savings goals. If you need help with the ins and outs of investing for retirement and beyond, investing services like blooom (which helps you manage your IRA or 401(k)) and Public investment app make investing accessible even for beginners.

8. Not Paying off Your Credit Card Balance in Full Each Month

I’ve certainly been there – when you’re not making enough to make ends meet and need to pay your bills each month, it can be tempting to put extra expenses on a credit card.

While credit cards provide welcome flexibility and rewards redemption opportunities, they can quickly turn into a major debt burden if you’re not careful. If it’s at all within your means, you should try to pay off your balance in full each month to avoid accumulating interest and building up debt.

9. Making Late Payments

22 Bad Money Habits Every Millennial Should Put Behind Them - Making late payments

Late payments are another common financial mistake when you’re new to personal finance. Unfortunately, they can have lasting consequences when it comes to your credit score and your wallet.

Late payments on bills often come with additional late fees and interest, and a history of late or missed payments can lower your credit score. If it’s your first time making a late payment, you should contact your creditor to see if they can forgive a one-time late payment.

10. Not Investigating All Your Options when it Comes to Financial Products

It can be easy to go with the path of least resistance when it comes to personal finance products like bank accounts, credit cards, and loans. Whether you get a recommendation from a family member or friend, get a flyer in the mail, or see an ad online, you may be tempted to go with the first available option.

Resist that temptation – you should always compare different financial products in order to ensure you’re getting the best deal possible.

11. Spending Too Much on Groceries

Groceries are definitely one of the biggest weaknesses in my budget! It’s so easy to spend more than you mean to at the grocery store, especially if you love to cook and eat delicious food.

If cooking at home and eating well is important to you, it’s okay to budget a little extra in the grocery department. But you should try your best to reign it in and stick to a reasonable monthly goal when possible. I’ve found it also helps to plan meals in advance, shop at bulk stores like Costco, and invest in shelf-stable staples like rice and lentils to stretch my budget even further.

12. Buying Everything New

If you’re trying to save money and get your finances under control, buying everything new can siphon off hundreds of dollars in savings each year. No matter what you’re looking to buy, from cars to clothing and everything in between, there are probably cheaper gently used options.

I love trawling Craigslist, yard sales, and thrift stores for hidden gems! While you probably won’t be able to find absolutely everything you need, it’s still a good idea to check out your options before you buy any brand new items at the sticker price.

13. Not Investing in Insurance

22 Bad Money Habits Every Millennial Should Put Behind Them - Not investing in insurance

When your budget is already tight, it can be tempting to forgo insurance in favor of making ends meet. But going without insurance can put you in an even worse financial situation when you need help the most.

If you’re able to, you should invest in insurance including health insurance, home or renters insurance, and auto insurance to make sure that you’re covered in the event of an emergency. Insurance marketplaces like Policygenius can help you to find an affordable insurance policy that works for you.

14. Ignoring Your Student Loans

Like many Millennials, I have a pretty sizable student loan burden racked up over the course of undergrad and graduate school. Making student loan payments on time each month can be a major strain on your budget, but failing to pay off your loans can have even worse consequences.

Luckily, there are some options to make paying down your loans more bearable. When it comes to federal student loans, you may be eligible for an income-based repayment plan that could drastically reduce your monthly payment. And for private student loans, you may qualify to refinance your loans at a lower rate and save on interest.

15. Spending More than You have to on Phone Plans

Phone plans are another common monthly expense that can add up fast if you’re not careful. When purchasing a phone plan, you should think about what services and data you really need before automatically selecting an expensive plan.

It can be helpful to look back at old billing statements and see how much data you really used each month. You may also want to consider getting on a family plan with family members, friends, or roommates to save money each month.

16. Not Shopping around for Auto Insurance

If you haven’t changed your auto insurance policy in a while, there’s a good chance that you could be saving money each month if you make a switch. That might sound like an auto insurance sales pitch, but it’s true!

Your rates are likely to be lower after you switch if it’s been a long time since you’ve been in an accident, or just because you’ve gotten older and are viewed as a less risky driver by insurance companies. Some car insurance companies, like Metromile, charge you based on how many miles you drive each month, which can be a boon if you’re mostly working from home.

If you’re happy with your insurance provider and don’t want to make a switch, ask them if they can reevaluate your monthly rate or match quotes from the competition.

17. Subscription Bloat

22 Bad Money Habits Every Millennial Should Put Behind Them - Subscription bloat

Subscription services have proliferated in recent years, from popular software like Adobe Creative Cloud to monthly subscriptions for everything from TV channels to cute underwear. While it’s easy to sign up for a subscription and forget about it, especially if it only costs a few dollars a month, they can really add up over time.

One way to cut down on subscriptions is to survey your bank statement at the end of each month and evaluate which subscription charges are truly worth it. 

If you don’t want to take the time to do this yourself, you can set up an account with Trim, a service dedicated to helping you clear out your unused subscriptions. They’ll even negotiate your bills for you on your behalf!

18. Lifestyle Inflation

Whether you just got a pay raise or started a lucrative side hustle, it can feel incredibly freeing to have a little extra cash left over at the end of each month. While it’s tempting to treat yourself and celebrate your new success, you shouldn’t let lifestyle inflation eat into your budget. By living within your means and socking away any additional money you earn into savings and investments, you can set yourself up for a bright financial future.

19. Not Having a Career Plan

While reducing your expenses, saving, and investing are all good strategies toward sound financial health, one of the most effective ways to jumpstart your finances is to earn more money. This isn’t always as difficult as it sounds!

By planning out your career path, you can work toward earning more in the future. If you think you’re not being compensated enough at your current job, you might want to consider asking for a raise or applying to better-compensated positions at other companies.

20. Not Setting Financial Goals

22 Bad Money Habits Every Millennial Should Put Behind Them - Not setting financial goals

Earning, budgeting, and saving money is a lot easier to do if you have concrete goals in mind. Whether your goal is to be debt-free, save up for a major expense like a new car or a wedding ring, buy a house, or even retire early, setting financial goals can motivate you to break bad money habits and create new, healthy habits that help you achieve your dreams.

Personally, I’m saving up for a little house in the countryside with a big vegetable garden and a little chicken coop.

21. Not Setting Personal Goals

Financial goals are usually pretty tightly interwoven with personal goals. Maybe your personal goal is to work part-time and spend more time with family, or maybe you dream of saving up money to travel the world.

Maybe you’re happy making less money at a job that you believe in and that makes the world a better place, or maybe you prefer a low-stress job with decent pay that allows you to devote time to creative projects. It’s a good idea to get a firm sense of your personal goals so that you can then use them to inform your professional and financial goals.

22. Not being Active in Your Community

Personal finance doesn’t take place in a vacuum, and there are plenty of factors outside our control when it comes to making and saving money. If there’s a cause you care about that has an impact on personal finance, like equitable worker compensation, universal healthcare, predatory lending, or other issues, you should consider getting involved.

While one person might not be able to change these big issues alone, many people working together can have a positive impact that stretches far beyond your own bank account.


The flip side to breaking bad habits when it comes to money is forming better ones in their place. This can be especially hard if you’re struggling financially, but every little step you take in the present will pay off dividends in the future. 

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About the author

Total Articles: 34
Margaret Wack is a writer based in Honolulu, Hawaii. Her writing on personal finance has appeared in venues including The Simple Dollar and She has degrees from Smith College and St. John's College, and enjoys good tea, dead languages, and bad weather.