Finance Lifestyle

9 Money Habits Keeping You Poor

9 Money Habits Keeping You Poor

After spending a decade immersing myself in the field of finance and money through a degree in finance, a qualification in accounting, and a career in investment banking, I have learned valuable skills to handle my own finances, recognize bad money habits, and break free from them.

In this article, I will share with you two of the most common bad money habits that hold people back and tips on how to break out of them.

Paying Yourself Last

I first heard of this concept in the book Rich Dad, Poor Dad by Robert Kiyosaki. It’s one of the blueprints in achieving financial freedom. Kiyosaki explains that the way people pay their bills can be broken down into two types: the poor people’s habit and the rich people’s habit.

The Poor People’s Habit

The poor people’s habit involves paying yourself last. When your paycheck comes in, you pay your rent, phone bill, subscriptions, fund your social plans, and save whatever’s left over—if there’s even any money left to save.

The Rich People’s Habit

On the other hand, rich people pay themselves first, which is what you want to do. Take a minimum of 10% of your income and put it into your savings account the minute you get paid. Treat it like paying a bill. By doing this, you’re guaranteeing that the money will be saved and won’t slip through your fingers through spending.

Some people may think it’s impossible to do this if they live paycheck to paycheck. However, when you take that 10% and put it away, your mind will find ways to structure your spending and make it last for the whole month, all while saving in the background.

Paying yourself first is the key to breaking the poor people’s habit. It’s important not to let others become richer by buying their products before securing your own financial future. By adopting the rich people’s habit, you’ll be on your way to overcoming one of the most common money habits that keep you poor.

Bad Debt

The second bad money habit is getting comfortable with bad debt. It seems that debt these days is actually the norm, with people using it to buy even the smallest of things. The rule of thumb should be that unless you can afford to pay for something outright in cash, you shouldn’t be buying it with any form of debt.

Credit card companies thrive when you’re bad with your finances, as the average credit card interest rate is 22%, which cancels out any benefits or rewards they provide if you can’t pay them off in time. There are exceptions, such as emergency healthcare, property, and education, but even then, you still want to manage your debt and pay off high-interest debt as soon as possible.


Not having a stockpile is the third bad money habit. This ties into the first point about paying yourself first, and it’s crucial to save enough to have a buffer of about three to six months. Having this buffer gives you peace of mind and frees up mental energy for more important things.

To build this buffer, start putting away 10% of your income, and once you have your stockpile, you can use additional savings to build your investment fund.

Income & Expenses

The fourth bad money habit is not knowing your income or expenses properly. Understanding your starting point is essential to determine where you want to be. Lifestyle inflation, where your spending rises as your income rises, can be a recipe for disaster.

You want to be in control of your finances and map out where things are going. Using a budget tracker that includes your income, savings, expenses, and debt repayments is crucial. Make sure to review your budget at least every three months.

Those who have a clear understanding of their financial situation and goals are more likely to build wealth compared to those who don’t.


The fifth bad money habit is having expensive hobbies. Many people enjoy shopping, which can partly be attributed to retail therapy. However, marketing, social media, and multi-billion-pound organizations encourage us to spend our money instead of keeping and investing it.

Being mindful of your spending habits and reevaluating your hobbies can help you break the cycle of excessive spending and improve your financial situation.


Coins in a jar and plant

Big media and advertising companies work to drive consumerism, understanding how to play on the psychology of fear of missing out. We are constantly bombarded with marketing messages about what we should own, wear, and where we should go on holiday.

To improve your financial position, you can focus on saving more of your existing income or create more income streams. The ideal combination is a mixture of both. However, it’s essential to break the bad money habit of thinking that saving money alone will significantly increase your wealth.

Saving money has a cap, but the potential for making money is infinite. Explore options like investing in the stock market, asking for a pay rise, or starting a side hustle.


Paying too much in taxes is another bad money habit. Taxes are likely the single biggest expense in your life. While everyone must pay taxes, many people do so without considering how they can legally reduce their bill.

The wealthy often have knowledge of legal corporate structures with tax advantages and hire tax advisors to help minimize their tax bills. To get ahead, it’s important to understand tax rules in a way that works in your favor.

For example, investing through an ISA or a Roth IRA, which are investment accounts that shelter your dividend and profit from taxes, or operating as a business instead of an individual if you’re a solopreneur. These tax savings are legal and can significantly impact your wealth.

Even if you prefer to pay more taxes, understanding the rules can help you redirect your money to causes that align with your values, rather than letting someone else decide where it should go.

Waiting Too Long to Invest

The eighth bad money habit is waiting too long to invest. Once you have savings and a stockpile buffer, you should start looking at investing that money so it works for you. Diversify your investments to weather different situations in life, but avoid leaving money in a bank account where inflation can erode its value.

Explore various investment strategies and don’t put off investing due to lack of time, money, or knowledge. The longer you delay, the harder it will be to achieve the same level of financial freedom as someone who starts investing earlier.

Not Caring About Finances

The ninth and final bad money habit is not caring about finances. If you don’t care about something, you won’t excel at it. Many people don’t care about their finances or even believe that money is evil. While there are certainly more important things in life than money, life is still largely dictated by finances.

Mastering your finances can give you freedom and independence. Find the right person or tools that help you resonate with your finances in a way that appeals to you, whether that’s through an employee perspective, entrepreneur perspective, or as a risk taker or conservative investor.

There will be someone who matches your investing style more closely, guiding you to a better financial future.