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How Do I Stop Being Bad With Money?

I can’t tell you the number of times I’ve heard people refer to themselves as “someone who’s bad with money.” They make statements about how they’ll always be broke or never get ahead because they believe they’re inherently bad with money.

But here’s the thing, none of us are born knowing how to manage money. This is something we learn along the way, and it’s a skill that we acquire over time. Therefore, many people who are good with money today weren’t always in the past, so change is possible. This, however, often requires a new plan and a mindset shift.

1. Change your language

First and foremost, it’s essential to change your language and how you view your financial situation.

Even though mindset alone won’t change your circumstances, I strongly believe in the power of this. If you’re constantly saying that you’ll always be bad with money or that your situation will never change, these statements can become a self-fulfilling prophecy. If you don’t believe in your ability to do better, you might not even try.

So instead of saying, “I’m bad with money,” try saying, “I’ve yet to learn how to manage money.”

Now, this doesn’t mean ignoring your past mistakes, as self-awareness can help you make better decisions in the future. What it means is not letting the past define who you are, or what you can become.

(Related: Get Your MONEY MINDSET BULLET JOURNAL and stop feeling like you can’t get ahead).

2. Make one good financial decision each day

Becoming better with money is not an overnight transformation. It takes time, commitment, and a series of mini steps.

To start, commit to making at least one good financial decision each day. Understandably, this might seem insignificant on its own. But collectively, these decisions can set the stage for a better financial picture.

Keep in mind, too, these don’t have to be monumental choices. For instance, instead of buying coffee on the way to work, you can brew your own or drink the coffee available in your office. And when going out to lunch with a coworker, instead of spending $15, maybe spend $10.

Even transferring a small amount of money into your savings account each day, like $5, can make a difference. This can help you become more conscious of your daily decisions.

Remember, one healthy financial habit can lead to another.

3. Create a daily spending journal

Keeping a spending journal is highly encouraged. This is when you write down every miscellaneous dollar you spend each day.

I recommend this because it’s often those smaller, insignificant purchases (which add up over time) that lead to overspending or going over budget.

It’s the $2 spent at the gas station on a candy bar, the bag of chips grabbed at lunch, or the extra items added to your cart in the checkout line. Even if you only spend $5 a day on miscellaneous items, that’s roughly $150 a month.

By understanding where your money goes, you can make adjustments and free up cash in your budget.

4. Forget what you’ve learned

Some people are “bad with money” because they were never taught how to manage it, or they had a bad example growing up.

The truth is, bad money habits can be passed down from generation to generation because our parents can only teach what they know.

And I realize that acknowledging this and intentionally forgetting what you’ve learned can be challenging – but it’s crucial.

With that being said, make a concerted effort to live within your means, spend mindfully, stop impulse shopping, and pay yourself first. 

5. Pay your bills on time, budget, and automate

Paying your bills on time is crucial because late payments can result in late fees, debt collection calls, and even damage your credit score. If you find yourself consistently paying bills late, it’s essential to address the root cause. In many cases, this is due to poor organization, lack of a budget, or forgetfulness.

Creating a budget is the number one step to take. This is a spending plan that helps you understand your income and expenses, allowing you to allocate your money wisely.

(Related: Find a download a user-friendly budgeting template)

Tracking both can ensure you have enough to cover your bills and avoid overspending. In addition, automating your bill payments can be incredibly helpful.

Set up automatic payments for your recurring bills, such as rent or utilities. This way, you won’t have to remember specific due dates or risk forgetting to make a payment. Also, setting payment reminders can help you stay on top of other financial obligations.

If you can’t make a payment by a due date, it’s important to communicate with your creditors. Ask for a payment extension or work out a payment plan to keep your account in good standing.

6. Tackle impulse spending

Controlling impulse spending is another crucial aspect of improving your financial situation. Impulse purchases are often unplanned and quickly add up – disrupting your budget and financial goals.

To gain control over this habit, it’s essential to understand why you’re making those purchases.

Take a moment to ask yourself why you’re about to buy an item. Are you trying to make yourself feel better after a bad day? Is shopping a form of entertainment or a distraction? Or did you simply forget to make a list before going shopping? Being honest with yourself about the reasons behind your spending can help you address the underlying issues.

Once you identify the motives behind your purchases, look for alternative activities or coping mechanisms. For example, instead of shopping after a bad day, try listening to music, going for a walk, or engaging in a hobby. Finding healthier alternatives can redirect your impulses and break the spending cycle.

In addition to understanding and addressing the emotional aspects, creating obstacles is also beneficial.

Consider freezing or locking away your credit card to slow down the purchasing process. This gives you time to think about whether you truly need the item. Another approach is to commit to a 24-hour waiting period before making any non-essential purchases. This waiting period allows you to evaluate whether an item is worth the cost.