7 Bad Financial Habits You Need To Break

    Disclosure: This post may contain affiliate links, meaning I get a commission if you decide to make a purchase or sign up through my links, at no cost to you. Please read our disclaimer for more info.

    Financial help for people in their 20s doesn't need to be difficult and you start by educating yourself today.

    These are 7 bad financial habits every ambitious Millennial should break in order to reach their financial goals. Financial help for people in their 20s doesn’t need to be difficult and you start by educating yourself today.

    Bad Habits of Perpetual Debtors

    Our blog was created to help millennials be smarter with their money, get out of bad financial situations and develop smart financial goals. Some people are still struggling with this.

    In fact, according to the U.S Census Bureau and the Federal Reserve, total consumer debt totaled $3.898 trillion in 2018, a 7.6% increase from the previous year. Average consumer debt per capita is approximately $11,880. This is due to a set of behaviors that debt seekers continue to do. By watching out for the following bad behaviors, you might be able to stop some of those bad habits in their tracks and reevaluate the way you think about and approach debt.


    Check out the following bad financial habits that you may need to break.

    1. Not Planning For Retirement

    Not contributing to your own retirement: One of the biggest mistakes you can make is not contributing to your retirement accounts. It’s not difficult to think that you should be saving for more short term goals like getting a nice sports car and that retirement is too far away.

    However, you can even sock away some savings in a Roth IRA if you make minimum wage while in graduate school. When you get your first job right out of college, begin saving for retirement and your future self will thank you. You should become to discipline your budget so that a portion of your paycheck goes to your retirement account. The key to building wealth and planning for retirement is TIME. You can’t buy time, so I would highly recommend that you start today if you haven’t already.

    2. Buying A Car You Can’t Afford

    Buying a car that is too expensive for you. I’m sure BMW would want millennials to think that you should have the latest of greatest 5 series. That new-car smell can easily run you over 40K in DEBT. In fact, living in Washington, D.C. public transportation makes it so I don’t even need a car (Even though I still have one, I love my car!).

    Another thing to consider is that new cars depreciate in value rather quickly and they say you lose money as you drive that new car off the lot. Be smart with your money and purchase the right car for your wallet.

    3. Not Emergency Savings

    Not having an emergency fund. Often, people find excuses as to why they don’t have an emergency fund. Common excuses being that the money can be used for your retirement or to pay bills.

    I would suggest that after all basic needs are meant you should start saving for an emergency fund which is typically 6-month living expenses. You’re likely to get more debt if you don’t have an emergency fund readily available and liquid.

    4. Buying Stuff On Credit

    If you don’t have any debt in your 20’s, be thankful. It’s very common to buy things on credit cards and just pay the monthly minimum but likely you are paying high interest on those amounts. Living on your own credit cards will lead you to live paycheck to paycheck, which can be an extremely tough habit to break once it’s formed.

    This practice can ruin your credit score at the same time. It’s best that you learn how to pay off your credit card debt fast and start using credit more wisely. Usually, if you don’t have enough money in the bank to pay for it, you can’t afford it.

    5. Not Having Financial Goals

    Neglecting to establish financial goals is a big reason why most people fail. If you never consider what you’d like to accomplish in five or ten years, it is likely that you won’t achieve anything by the end of that period. If your goals are established and financial goals are set in your 20s it can definitely help you plan better and concentrate on methods to achieve your goals.

    A good amount of stress can arise from not establishing money goals as you tend to work harder to make any kind of advancement towards certain large purchases you may buy later in life such as a home.

    6. Always Comparing Yourself To Others

    Keeping up with the Joneses (particularly if they’re your parents): The pressure to fit in can function as a subconscious motivation behind lots of poor fiscal choices, but the catastrophe of the unproductive mindset is clear when you can always find someone who has more than you do.

    Occasionally that pressure can build by believing that you are able to have everything they have and comparing your lifestyle to your own parents’ lifestyle or friends with higher salaries. If you don’t understand the wealth of your parents (and others) it is because they have had many years to amass their riches and if you try to keep up with them you could set unrealistic goals, which might result in making high-risk fiscal choices. So it’s best to live within your means once you realize how much money you really need.

    7. Not Paying Yourself First

    Not beginning the act of paying yourself. It’s a mistake to not pay yourself first, even should you have a high paying profession. You essentially prioritize saving cash by paying yourself first which is how you start to develop wealth. Ideally, this money will be invested. Individuals that don’t learn to save generally spend all their cash having fun and paying bills. Ultimately, they find there’s nothing left to save. Consider finding a high-yield savings account to stash your earnings:

    aspirationbest savings accounts
    • Impressive APY on savings
    • Earn cash back on purchases with ethical retailers
    • Deposits do not fund fossil fuel exploration or production
    • The impressive 1.0% APY is only available with the Aspiration Plus account, which has a $15 per month fee.


    Member, FDIC


    sofi logobest savings account
    • Hybrid Checking and Savings Account
    • Pay no account fees or ATM fees worldwide
    • Open an account in minutes - all free


    Member, FDIC


    axos savings accountbest savings accounts
    • No monthly maintenance fees
    • No minimum balance requirements
    • Interest compounded daily
    • 24/7 online access with Online and Mobile Banking
    • FDIC Insured


    Member, FDIC


    cit bank logobest savings accounts
    • Higher rates than traditional banks
    • 24/7 Account Access
    • Secure banking features
    • FDIC Insured


    Member, FDIC



    8. Not Saving Money on Every Purchase

    In the world of cash back sites and so many different blogs online that can help you save on jus about anything — you are likely overpaying for something.

    For example, I recently needed eyeglasses and I would usually just go to the store and buy them. That was when a friend told me the scoop on how to save you hundreds of dollars while shopping for glasses.

    This can applied to anything by using rebate apps and money saving apps.

    Final Word

    Being in your 20s and dealing with money is tricky because personal finance is not taught in the education system.

    By making smart financial choices (and breaking these financial habits above) you will begin to take responsibility for your own financial success and following this website you can continue to learn more about money and build good financial habits.

    Our Pick
    Chime Banking
    • Experience fee-free overdraft up to $200* when you set up direct deposit with SpotMe.
    • Let Chime spot you when you need that little extra cushion to cover an expense.
    • Join the millions and make the switch today!
    *SpotMe eligibility requirements apply. Overdraft only applies to debit card purchases and cash withdrawals. Limits start at $20 and may be increased up to $200 by Chime.

    About the author

    Brian Meiggs
    Brian Meiggs
    Brian Meiggs is a personal finance expert, and the founder of My Millennial Guide, a personal finance site helping you put more money in your pocket. He helps millennials follow the smart money in order to increase their earning potential and start building wealth for the future. He regularly writes about side hustles, investing, and general personal finance topics aimed to help anyone earn more, pay off debt, and reach financial freedom. He has been quoted as a top personal finance blogger in major publications including Yahoo! Finance, NASDAQ, Discover, MSN Money and more.


    Please enter your comment!
    Please enter your name here

    On a similar note...

    Explore More On