Unfortunately, many people fall into a pattern of making poor financial decisions that can have long-lasting effects on their lives. This could be due to financial stress or growing up with poor money management skills.
Forum users discuss common money habits that show some people are terrible at making financial decisions. These are signs to determine if someone is bad with money, which is essential to know if you want to be their friend, partner, etc.
1. Asking Friends for Money
While asking friends or family for money may seem like a quick solution to financial problems, doing so without the intention of paying them back can lead to bad blood.
It’s one thing to ask for money and pay it back as quickly as possible. It’s another thing to rely on friends for financial assistance constantly. Soon, they’ll have no friends.
2. Confused Priorities
When people complain about their finances yet own designer clothes, expensive cars (or accessories), or the latest technology, it shows that they have confused priorities.
It’s essential to prioritize necessities such as food, shelter, bills, and a rainy day/emergency fund over unnecessary luxuries. Failing to do so can lead to financial instability and debt.
3. Impulsive Purchases
Making impulsive purchases without considering the long-term effects on one’s finances is a common habit among people who struggle with financial decisions.
While it may bring temporary satisfaction, it can quickly lead to debt and financial strain in the long run. Learning to control impulsive buying habits is crucial for making better financial decisions. One way people break this habit is by giving themselves 24 hours to consider a purchase before actually buying it- often, the impulse will pass.
4. Using Credit Cards Like Free Money
Not understanding the effects of compound interest on a credit card balance seems to be a common issue among people who are terrible at making financial decisions.
Using credit cards without a plan to pay off the balance in full each month can quickly lead to high-interest rates and debt that can take years to pay off.
5. Loans on Unnecessary Items
Taking out loans for unnecessary items, such as vacations or luxury purchases, is a red flag for poor money management skills.
While it may seem like a quick solution to fulfill immediate wants, it can lead to long-term financial struggles and debt.
6. Costly Car Payments
Having a high monthly car payment may seem like a sign of success, but it could also indicate poor financial decision-making skills. Plus, those shiny new cars often come with much higher insurance premiums.
A more affordable car payment (or even buying a used car in cash) can free up money for other expenses and help avoid potential debt.
7. Food Delivery
According to the forum, people share a common trend among financially illiterate individuals, which is relying too heavily on food delivery services.
While it may seem convenient, the fees and tips can add up quickly, leading to unnecessary expenses that could be avoided by cooking at home or at least picking up the food themselves.
8. Expensive Nights Out
More than one person shares that if you’re struggling with rent each month, it’s probably best to skip all the nights out on the town.
Spending money on expensive dinners, drinks, or entertainment can quickly add up and lead to financial strain. Learning to say no (or at least find more affordable options) is crucial for making better financial decisions.
9. Lack of Savings
Not having savings can be a scary place to be, making life one medical bill or car repair away from financial disaster.
Unfortunately, many people who struggle with managing their money also lack savings and emergency funds. Making a habit of saving even just a small amount each month is smart and can help avoid potential financial crises.
10. Constant Plans for Spending
Every time it’s payday or a tax refund comes in, some people have plans for spending it before it even hits their account.
This constant mindset of needing to spend money as soon as you receive it can make it impossible to get ahead financially.
11. Renting Furniture or Electronics
Renting furniture or electronics may seem like a more affordable option in the short term, but it can cost much more in the long run.
Instead of throwing away money on rental fees, saving up to purchase these items outright (if you decide you truly need them) can save money and improve financial decision-making skills.
12. Not Seeking Financial Advice
Many people who struggle with making good financial decisions fail to seek out professional or even just knowledgeable advice.
Ignoring the importance of understanding personal finances and seeking guidance can lead to continuing poor money habits and potential financial disasters.
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JayDee Vykoukal is a writer, author, mom, and Doctor of Physical Therapy. She has been writing about everything motherhood and health-related since 2018 when her first daughter was born, and she wanted to stay home. She loves to research new topics and fun facts with her kids to teach them about the world.
