Hey there! I’ve spent the last decade completely immersed in the world of money and finance. From getting my finance degree to working in Investment Banking, I’ve picked up some seriously life-changing skills along the way. The biggest one? Learning how to handle my own money, spot my bad habits, and actually break free from them.
Let me share the nine most common money traps I see people fall into — and trust me, I’ve fallen into a few myself!
1. Putting Yourself Last on the Payment List
You know what changed my whole perspective on money? Reading “Rich Dad Poor Dad.” Kiyosaki talks about two ways people handle their paycheck.
Most folks (including my younger self) pay everyone else first. Your paycheck lands and boom — there goes the rent, phone bill, Netflix subscription, weekend plans… and then maybe, just maybe, you’ll save whatever coins are left rattling around. Sound familiar?
But wealthy people? They flip this completely. They pay themselves first. It’s super simple: the minute money hits your account, immediately move at least 10% to savings. Treat it like your most important bill.
I started doing this three years ago and honestly? Game-changer. Even when things were tight, that money was already tucked away before I could spend it on takeout or another pair of shoes I didn’t need.
2. Getting Cozy with Bad Debt
Isn’t it crazy how normal debt has become? People are swiping credit cards for the smallest things these days — birthday gifts, clothes, even coffee!
My personal rule is pretty straightforward: if I can’t afford to buy something with actual cash, I probably shouldn’t be buying it with plastic.
Here’s the thing about credit card companies — they’re literally banking on you being bad with money. With average interest rates around 22%, all those points and cashback perks vanish if you can’t pay off your balance each month.
Start by building up about six months of expenses as your safety net. Once you’ve got that cushion, you can start thinking about investing what you save beyond that.
3. Flying Blind with Your Money
How can you know where you’re going if you don’t know where you are? That’s the problem with not tracking your income and expenses.
Ever heard of lifestyle inflation? It’s that sneaky thing that happens when you get a raise and suddenly “need” a fancier apartment or nicer car. Before you know it, you’re making more but still living paycheck to paycheck.
The folks who actually build wealth aren’t necessarily the ones with fancy degrees or high-paying jobs. They’re the ones who know exactly what they own, what they owe, and have clear financial goals with step-by-step plans to get there.
Just seeing your spending in black and white can be a real wake-up call. I remember the first time I tracked my expenses for a month — I was spending HOW MUCH on coffee?!
4. Expensive Hobbies Eating Your Cash
Do you love shopping? Going out? Collecting something? Hey, no judgment here — we all need things that bring us joy.
But here’s the deal about improving your finances: you’ve got two main options. You can either save more of what you already make, or you can make more money. Ideally, you want a bit of both.
You can’t build wealth if you’re earning six figures but spending seven. But focusing only on pinching pennies has its limits too. Those cashback apps and coupon clipping will only take you so far.
Real wealth-building means working both angles — saving a bigger chunk of your income AND finding ways to earn more, whether that’s through investing, asking for that overdue raise, or starting a side gig.
Remember this: your saving potential has a ceiling, but your earning potential? Sky’s the limit.
5. Handing Over Too Much to the Tax Man
Let’s talk about something nobody loves but everyone pays: taxes.
Taxes will likely be the biggest expense of your entire life. Yep, bigger than your house. While we all need to pay our fair share, wealthy people understand the tax code and use legal strategies to keep more of their money.
Getting ahead financially often means understanding how tax rules can work in your favor. Like investing through tax-advantaged accounts such as an ISA or Roth IRA that shelter your investments from taxes. Or maybe setting up a legitimate business structure if that makes sense for your situation.
Even if you’re perfectly happy paying taxes, understanding the rules means you can choose where your money goes rather than letting someone else decide. Maybe you’d rather donate to causes you care about instead?
I’ve been considering making a video about tax strategies, but it’s a topic that can ruffle feathers. Would that be helpful for you? Let me know!
6. Waiting Forever to Start Investing
Once you’ve built up that safety cushion we talked about, what’s next? Your money should be working as hard as you do!
Keeping too much cash in a regular bank account is like watching it slowly evaporate thanks to inflation. Each year, that money buys less and less.
I’ve got my money spread across different types of investments — some super safe ones and yes, some riskier ones that I’m prepared to lose if things go south.
The key is to start once you’ve saved enough. There’s always going to be an excuse — not enough time, not enough knowledge, not enough money. But every year you wait means you’ll have to work that much harder later on.
I made a video about what to do with your money during tough economic times like the current recession. Check it out if you’re interested! I’ve also got one on building wealth and making your money work for you instead of the other way around.
The Bottom Line on Breaking Money Habits
Look, changing money habits isn’t always easy — trust me, I know! But these small shifts can completely transform your financial future:
- Pay yourself first (seriously, set up that automatic transfer today)
- Stay away from high-interest debt like it’s your ex
- Know your numbers — all of them
- Find ways to earn more while also saving smarter
- Learn enough about taxes to not overpay
- Start investing earlier than you think you’re ready
What’s one money habit you’re working on breaking right now? Sometimes just naming it is the first step to changing it.
Remember, this stuff isn’t taught in schools (why not?!), so don’t beat yourself up if you’re still figuring it out. We all are! The important thing is that you’re here, reading this, and ready to make some changes.
Your future self is going to be so thankful you did.
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