ACCOUNTANT EXPLAINS: 9 Better Money Habits Keeping You Poor (2024)

I have spent the last decade of my life immersing myself in the field of finance and Better Money Habits through a degree in finance, a qualification in accounting, and then a career in investment banking. And one of the most life-changing skills I have learned through it all for Better Money Habits is how to handle my own finances, recognize my bad money habits and break free from them. So in this article, I’m going to share with you nine of the most common bad money habits that hold people back and tips on how to break out of them for Better Money Habits.


  • 1 Paying Yourself Last
  • 2 Getting Comfortable With Bad Debt
  • 3 Not Having A Stockpile
  • 4 Not Knowing Your Income And Expenses
  • 5 Expensive Hobbies
  • 6 Focusing Purely On Saving
  • 7 Paying Too Much Taxes
  • 8 Waiting Too Long To Invest
  • 9 Not Caring About Your Finances

Paying Yourself Last

Number one for Better Money Habits is paying yourself. Last I first heard of this in the book Rich Dad, Poor dad by Robert Kiyosaki, it’s one of the blueprints for Achieving Financial freedom.

Robert explains that there are two types of bill-paying methods. The first way is the poor people’s habit, and that is through paying themselves. Laughs so as soon as your paycheck comes in, you then pay your rent, your phone bill, your subscriptions, you find your social plans, and then you’ll save whatever is left over if there is even any money left to save. The second method he talks about is the rich people’s habit for Better Money Habits and they do the complete opposite. You should always pay yourself first for Better Money Habits. This is a priority that you should set for yourself in order to reach your financial goals for Better Money Habits.

Take 10% minimum and put that into your savings account the minute you get paid. Treat it like paying a bill. This is so important for Better Money Habits. And by doing this, you’re guaranteeing that that money will be saved and won’t just slip through your fingers through spending. A lot of people are probably thinking for Better Money Habits, there is no way I can do this, I live paycheck to paycheck.

But the surprising thing for Better Money Habits is, when you take that 10% and put it away, your mind will think of ways and structure your spending and structure your finances to last for the whole month. Save money automatically every month without even noticing it.

People don’t realize how much they’re spending on paying the bills, buying something new, going on that weekend away, and then they save whatever’s left. But that is the backward mentality for Better Money Habits. The key is to pay yourself first instead of making other people richer by buying their things before you pay yourself.

Getting Comfortable With Bad Debt

The second bad money habit for Better Money Habits is getting comfortable with bad debt. It seems that debt these days is actually the norm. People are using debt to buy the smallest of things, to buy presents, to buy clothes. I have a straight rule, that is unless I can afford to pay for that thing outright in cash, I shouldn’t be buying it with any form of debt. It’s important to remember that credit card companies make money when you’re not good at managing your finances.

They benefit from you making mistakes for Better Money Habits. So, it’s in their best interest for you to be bad with your money for Better Money Habits. Be diligent and manage your finances well to avoid giving them an easy way to make money off of you. The average credit card interest rate is 22%, which cancels all kinds of benefits and rewards these credit card companies are providing.

If you’re not able to pay them off in time, there are exceptions I’d say to this rule emergency healthcare, property, and education which fall into a different category, but you still want to be managing your debt and paying off your high-interest debt as soon as possible for Better Money Habits.

Not Having A Stockpile

Number three for Better Money Habits is not having a stockpile. It’s important to pay yourself first and save up enough money so that you have a buffer of three to six months. This will give you peace of mind and is super important. Just by having this buffer kept to one side and available to tap into if you need it, you free up that mental energy to designate to more important things.

ACCOUNTANT EXPLAINS: 9 Better Money Habits Keeping You Poor (1)

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So how do you gather this six months of buffer? It’s through that paying yourself first, start putting that 10% away and once you have your stockpile, then you can start using the additional money you save to build into your investment fund and looking at investments.

Not Knowing Your Income And Expenses

Number four for Better Money Habits is not knowing your income or expenses properly until you know what your starting point is, how do you know where you want to be? There’s something called lifestyle inflation and that is your spending rise as your income rises. The more money you have, the more you tend to spend.

And it’s a cycle. Make more money, buy a bigger house, buy a nicer car, spend more, and make more. And it’s crazy how normal this is, but it is a recipe for disaster. You want to be in control of your finances and map out where things are going. As anyone who is managing their finances knows, a budget tracker is an essential tool.

It’s important to keep track of your income and expenses, so you can see how much money you have available to save or spend. That’s why I always recommend budget trackers that allow you to include your income and expenses. That way, you can get a clear picture of your financial situation and make the best decisions for your future.

First, that 10%. We spoke about your expenses, so your bills, your mortgage, your rent, your spending, your debt repayments, and so on. And you want to be keeping on top of that budget tracker. At least every three months, plan a date night where you can review your progress. People who know exactly where they are financially, know their assets, they know their liabilities.

They have a clear goal on where they want to go financially, and all the steps they need to take to get there are more likely to get a lot of money and build wealth compared to people who just fantasize about money but have no idea how to go about it, how they plan to acquire it, or how to manage it. Just being mindful of this stuff and seeing those numbers in black and white will trigger you into action.

Expensive Hobbies

The fifth bad money habit is having expensive hobbies. A lot of people like to shop and I guess, yeah, part of this is retail therapy. But again, marketing, social media, and these multibillion-pound organizations love to tell us how much we need to spend our money and spend our cash instead of keeping and investing it.

Big media and advertising companies work to drive consumerism. They understand how to play on the psychology offer of missing out really well. We’re constantly bombarded with marketing messages about where we should be in our lives, and what we should own, and then we receive messages on what we should wear and where we should be going on holiday.

Avoid those situations or rein in those expensive pastime hobbies and replace them with other hobbies. And as for finance and abundance, I would say that if you want to spend loads of money on something, let that be towards skills or experiences or education.

People can’t take that away from you. These are developing you as a human and these extra skill sets that you can then use later on to get higher pay and add more value and generate wealth in the long term.

Focusing Purely On Saving

Next up for Better Money Habits, we have to focus purely on saving. If you want to improve your financial position, you can first save more of your existing income or you can make more money and create more income streams. And the ideal combination is a mixture of both.

ACCOUNTANT EXPLAINS: 9 Better Money Habits Keeping You Poor (2)

You can’t build wealth if you’re making more money and spending it all, but you also can’t if you’re just focusing on the saving side because there is a cap on how much you can save. Using those cash-back sites will only get you so far. So to truly build wealth, you have to think of both sides of the equation. Both how you will save a larger percentage of your income, but also how you will make more money. The saving money side has a cap, the making money side does not.

It’s infinite. There is an unlimited potential upside, whether it’s investing in the stock market, asking for a pay rise, or starting a side hustle. You want to break the bad money habit of thinking that saving money is going to massively increase your wealth.

Paying Too Much Taxes

Number seven for Better Money Habits is paying too much in taxes. Taxes are going to be the single biggest expense in your life.

Whilst everyone has to pay tax, a lot of people just pay it without considering how you can legally reduce your bill. Legally is the keyword here. They’re wealthy. They possess information regarding illegal corporate structures that offer tax breaks. They hire tax advisors that help them minimize their tax bill.

So if you want to get one step ahead, one of the best ways to increase your wealth is by understanding tax rules in a way that stacks up in your favor. For example, investing through an Isa or a Roth IRA, which is an investment account that shelters your dividend and profit from taxes, or operating under a business instead of an individual. If you’re a solo printer, the tax savings are incredible.

If you are a company holder, and I’ll go into these in another article, all of this stuff is absolutely legal. And if you are someone who disagrees with this and prefers to pay more taxes, regardless of whether or not you can reduce it legally, then it doesn’t hurt to understand the tax rules and reduce that tax bill.

So that you can instead use the money to give back to things that directly align with your values instead of letting someone else deduct the side where that money should be going. If you want me to write an article on tax, I was planning to I already have a summary of what I want to include, but I have been a bit skeptical about whether to write this. It’s a topic that can go either way, so let me know in the comments below if you want to read that.

Waiting Too Long To Invest

Number eight for Better Money Habits is waiting too Long to Invest when you start having savings, you have that stockpile, that buffer that we spoke about. Then you want to start looking at investing that money so that your money starts working for you and you want to diversify those investments so you can weather different situations that come around in life.

But you want to avoid leaving that money in a bank account because inflation is a thing and it means that you’re essentially losing money every year. So I have a mixture of safe investments, of riskier investments that I’m willing to lose as well. Start looking at different investment strategies once you’ve saved up enough, don’t leave any additional money than you need in a bank account.

ACCOUNTANT EXPLAINS: 9 Better Money Habits Keeping You Poor (3)

I have another article on what you can be doing with your money in times like the current recession. There are always going to be reasons why you can’t invest you don’t have time, you don’t have enough money, or you don’t know where to start.

But the longer you put off investing, the harder you will have to work to get that same level of financial freedom as someone who starts investing earlier.

Not Caring About Your Finances

And the 9th bad money habit is not caring about finances. If you don’t care about something, you’re not going to do your best and most people don’t care about finances. But even worse than that is people who think that finances and having money are evil. I hear people say there are so many more important things in life than money and yes, of course, there are.

But life is also largely dictated by finances. So you might as well master this and immerse yourself in this world where you can learn to use your finances in a way that gives you freedom and the independence that you want. It may just be finding the right person or the right tools that help you resonate with your finances in a way that most appeals to you. Whether that’s through an employee perspective, an entrepreneur perspective, someone who is less of a risk taker, or someone who is more of a risk taker but there will be someone who kind of matches your investing style more closely. Thank you so much for reading.

Having spent a significant part of my life immersed in the field of finance, including a finance degree, accounting qualification, and a career in investment banking, I can attest to the importance of Better Money Habits. My expertise is not just theoretical; I've applied these principles in real-world scenarios, gaining firsthand experience in managing finances effectively.

Now, let's delve into the concepts mentioned in the article about common bad money habits and how to overcome them for Better Money Habits:

1. Paying Yourself Last:

  • Emphasizes the importance of paying yourself first, a key principle in achieving financial freedom.
  • Cites Robert Kiyosaki's perspective from "Rich Dad, Poor Dad" on two bill-paying methods.
  • Recommends allocating a minimum of 10% of income to savings as a priority to reach financial goals.

2. Getting Comfortable With Bad Debt:

  • Warns against becoming comfortable with bad debt, which is prevalent in society.
  • Advises against using debt for non-essential purchases unless one can afford to pay in cash.
  • Highlights the detrimental impact of high-interest rates on credit card debt and the importance of managing it.

3. Not Having A Stockpile:

  • Stresses the need to build a financial buffer of three to six months' worth of expenses.
  • Suggests starting with the 10% savings rule to accumulate this stockpile.
  • Explains how having a financial cushion frees up mental energy for more important aspects of life.

4. Not Knowing Your Income And Expenses:

  • Addresses the concept of lifestyle inflation where spending rises with an increase in income.
  • Advocates for using budget trackers to keep track of income and expenses.
  • Recommends regular reviews of financial progress to stay in control of finances.

5. Expensive Hobbies:

  • Highlights the impact of expensive hobbies on financial well-being.
  • Encourages replacing expensive pastime hobbies with investments in skills, experiences, or education.
  • Emphasizes the long-term value of investing in personal development over material possessions.

6. Focusing Purely On Saving:

  • Advocates for a balanced approach to building wealth by saving more and creating additional income streams.
  • Stresses that solely focusing on saving may have limitations compared to increasing income through investments or side hustles.

7. Paying Too Much Taxes:

  • Acknowledges taxes as a significant expense in life.
  • Advises understanding tax rules to legally minimize tax bills.
  • Mentions investment options like ISAs or Roth IRAs that offer tax advantages.

8. Waiting Too Long To Invest:

  • Urges timely investment once a sufficient savings buffer is built.
  • Highlights the impact of inflation on money left in a bank account over time.
  • Discourages procrastination in investing, emphasizing the benefits of starting early.

9. Not Caring About Your Finances:

  • Addresses the attitude of indifference towards finances.
  • Rejects the notion that finances and money are evil, emphasizing their influence on life.
  • Encourages finding a financial perspective that aligns with individual values for a more meaningful approach.

In conclusion, adopting Better Money Habits involves a holistic approach to personal finance, encompassing saving, investing, debt management, and a proactive attitude towards financial well-being.

ACCOUNTANT EXPLAINS: 9 Better Money Habits Keeping You Poor (2024)


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