Harmful Money Habits That Are Hard to Break if You've Been Poor

by Lyle Daly | Updated July 17, 2021 - First published on March 26, 2020

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Are your past money troubles continuing to hold you back?

Anyone who has ever been in a rough spot financially knows that you develop certain survival strategies to make it work. You juggle bill payments so that your bank accounts don't run out of money halfway through the month. You always look for the most inexpensive items when shopping. Simply put, you do whatever you need to get by with limited funds.

While these habits are often necessary at the time, they can become problematic once you're more financially stable. For people who used to be poor, certain money mindsets stick with them even though they're no longer beneficial.

To find out if this is affecting you, see if you're still holding on to these examples of harmful money habits you developed when money was tight.

Picking the cheapest option despite obvious drawbacks

If you've had to be very careful about how much you spend in the past, you may now tend to go for the cheapest option upfront, even when it's worse for you in the long run.

Let's say you're purchasing web hosting for a site you're launching. You could get three years of service for $150 or a month-to-month service for $10. The three-year package is undoubtedly a better deal, as it breaks down to about $4.17 per month on a service you'll likely need for several years.

Yet you still gravitate toward paying monthly, because $10 to start is so much less than $150. You can afford that $150 purchase now, but you have habits ingrained from when that kind of expense would break your budget.

Feeling guilty about spending money on yourself

During your financial struggles, you most likely had to keep expenses to a minimum and avoid any unnecessary luxuries. After going through that, it's hard to embrace the idea that it's okay to spend money on yourself.

So you second-guess every purchase that you don't need, whether it's a new video game system you'd love or something as trivial as a cappuccino on your way to work. You always have that nagging question of Should I really be buying this? in the back of your head.

Not using autopay

One of the simplest ways to make money management more convenient and less time-consuming is to set up autopay. You won't need to manually log in to every account so you can pay your bills each month, which could easily save you half an hour or more. And assuming there are sufficient funds in the payment account, you won't miss any payments.

It seems like a no-brainer -- unless you used to carefully arrange bill payments so you could stretch your money until the end of the month. That can leave you with paranoia about potential worst-case scenarios. You know that you now have plenty of money to cover your bills, but you avoid autopay because it just doesn't feel safe to have payments going through without first checking the money is there.

Valuing money more than time

It's understandable that someone who's used to cutting costs will value money more than time. But when you're financially stable, you need to start considering the value of your time and not just how much you're spending.

Imagine you're comparing two gyms: One costs $50 per month and the other costs $20 but is 15 minutes farther away. Your first instinct may be that the $20 gym is a much better deal. That could be true overall, but which is the better deal for you?

You'll be spending 30 minutes more roundtrip to visit that second gym. If you go to the gym four days per week, that's 16 days per month. You'll spend eight hours more in travel time to save $30. Is your time worth more than $3.75 per hour?

How to correct your past survival strategies

What these harmful habits have in common is that they stem from financial insecurity. Despite being in a much better situation, you still worry that it could all come falling down if you aren't careful. Fortunately, you can start fixing these worries with two steps.

First, you need an emergency fund. It should have at least three months' worth of living expenses, and you can save more if that helps you feel more secure. With an emergency fund, you'll be more confident that you can weather any future financial problems.

Second, make sure you have a monthly budget with money earmarked for discretionary expenses. Let's say after you pay all your bills and contribute to your savings accounts and retirement fund, you have $250 left. That $250 is yours to spend however you want. You've confirmed you can meet all your obligations already, so go ahead and use that extra money guilt-free.

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