Are you bad at money management? You can change that.

How do you know if you're bad with your money? Here are eight reasons why you might be terrible at money management, and eight ways to change your habits for good. 

Murad Sezer/Reuters/File
People can be bad at managing money for a multitude of reasons, such as being an impulsive shopper. But, there are ways to fix bad money habits.

Perpetually broke? Always holding your breath when you run your credit card, worried your balance has finally tipped over the limit? Living paycheck-to-not-quite-the-next-paycheck?

Some people are bad at money. (I should know — I used to be one of them.) But you don't have to be that way forever. Here are eight reasons you suck at money — and how to fix them.

1. You're an Impulse Spender

A little retail therapy is fine and dandy, if it's not a chronic issue that causes you financial distress. Had a rough week? Sure, a splurge on a new pair of running shoes or a shade of lipstick that is inappropriate for work can offer a quick (and temporary) pick-me-up, assuming you have the cash to spare. But if you don't, then retail therapy is a bad idea. Actually, spending just to make yourself quickly feel better is almost always a bad idea.

If you just had a baby and hate the way your body looks (I know nothing about this, shut up), then an expensive haircut and a bottle of self-tanner aren't actually going to fix the problem, although they may distract you from the issue for a day or two. If you hate your job, binge-buying a ton of video games may entertain you in your off-time, but won't actually make your working hours any more bearable.

How to Fix It

Check yo'self before you wreck yo'self if retail therapy is a regular habit. At the very least, try to determine exactly what the problem is, find the root of it, and address it head-on. If you need more education to land your dream job, then you should be focusing your finances on that, rather than on needless entertainment.

2. You're Unprepared or Lazy

I waste a lot of money on take out. It's not that I don't like cooking — because I do — but that I am truly terrible at meal planning and buying groceries accordingly. When I was single, eating was simply a matter of buying a fresh loaf of bread and some good cheese and maybe some cheap wine, but now I have to feed a whole family, it's become a little more complex.

Or perhaps you find yourself paying through the nose for services, like yard or home care, that you could do yourself. There's nothing inherently wrong with paying someone else to perform work for you, as long as you can afford it, but if your budget is stretched, then cutting back makes sense.

How to Fix It

Find ways to make the necessary work more bearable. If it's meal planning, take a look at websites and meal planning apps that help you plan, shop, and cook. Enlist the help of your favorite music while cleaning and doing laundry. Get a lawn mower that works. I had to spend $400 to find a lawn mower that I could start, but that's still cheaper than paying someone to come and mow my lawn every week or so.

3. You Had Bad Money Role Models

Maybe your parents were terrible at money and you learned their bad money habits. It can be hard to break out of this mold if you've been shaped by it since childhood, since old habits die hard. But if you want to put yourself in a better financial situation, you need to forget what you learned growing up and start fresh. Fortunately, it's never too late to learn good money management skills.

How to Fix It

The internet is your friend when it comes to money management. You can peruse personal finance websites (like this one!) or take a free online course in money management.

4. You Had No Money Role Models

Maybe no one ever taught you the basics of money management and you've been winging it poorly. (Incidentally, back when I was in school in the last millennium, Home Economics courses taught us how to sew and how to microwave eggs, but never mentioned budgeting.)

Parents often believe that they are doing their children a favor by not exposing them to the dirty business of money management. While understandable, the notion is misguided. Sometimes families have to tighten their belts to make ends meet, and it's not wrong to explain to children why they can't go to the movies every weekend.

How to Fix It

If you have kids, you can break the cycle of financial silence by allowing your kids to participate in planning meals and family budgets. Although learning basic money management skills can seem daunting when you're an adult, getting the whole family onboard can make it less grueling.

5. You Try to Keep up With the Joneses

Maybe you idolize people who have a lot, and believe that buying things is the only way to be happy. Or maybe you've just bought into the idea (haven't we all?) that you need to have at least as much as your neighbors in order to fit in.

Humans are social creatures, and we tend to care deeply about what our peers think of us. This is, of course, why many advertisers sell an image of who you can be when you buy their product, rather than just selling the actual product.

How to Fix It

Just like occasional shopping sprees, there's nothing inherently wrong with wanting to impress other people, but buying things specifically for the sake of shaping someone else's opinion of you is silly, especially if you don't really need what you are buying. Before you buy anything, ask yourself, "Would I spend money on this if I knew that no one else would ever see it?"

6. You Are the Joneses

Or at least… you were the Joneses, until financial circumstances changed, and your spending habits didn't.

Perhaps you lost your job and now you have to scramble to make ends meet for a while. It doesn't matter that people once envied your brand new car and constantly updated wardrobe; what matters now is putting food on the table and paying the bills. A part of your new life involves adjusting budgets and expectations to meet reality.

How to Fix It

You might find that changing your spending habits is as simple as cooking at home instead of dining out, or learning not to shop as much. Some downsizing might be more serious, like reducing the number of cars that you own or learning to live in a smaller house. Regardless of the size of changes that you have to make, you'll do well to learn to let go of the past and accept the present.


Hey, I'm totally in favor of living for the moment, but that doesn't mean that you can't save for the future. And while you can't take it with you when you die, you're going to need those savings to help you out in old age (sure, it might seem far away now, but you'll be amazed at how time flies once you hit your 40s).

How to Fix It

Part of the joy of being young is taking calculated risks and enjoying the freedom that comes from a relative lack of responsibility. But that doesn't mean that you have to struggle with money — money problems are a stressor, and nothing ruins the fun like stress. Learning to live within your means while young is smart, and it's also easier than trying to learn when you are older.

8. You Have Really Bad Luck (or Dumb Relatives)

Not everyone in a lousy financial situation got there through bad habits. I happen to be good friends with a couple who continually ends up having to empty their savings because their families are financially irresponsible, and they find themselves having to bail out spendthrift siblings or medically challenged parents.

Medical bills are a major cause of bankruptcy in the U.S.; even people with health insurance can end up losing all of their savings on expensive treatments. Even Medicare and Medicaid don't cover the full cost of many treatments — my own mother recently went through both chemotherapy and radiation to treat cancer, and would have paid much more out of pocket if she hadn't purchased supplemental health insurance to cover what Medicare would not.

How to Fix It

There's not much you can do when calamity strikes, other than to pick up the pieces and learn from any mistakes (like gaps in insurance coverage). But you can prepare by having emergency savings on hand and being adequately insured.

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