10 Bad Spending Habits That Keep 90% of People Broke

Jun 10, 2025

By Will Moore

Do you ever look at your bank account at the end of the month and wonder, "Where did all my money go?" You're not alone. According to a 2023 survey by the Federal Reserve, nearly 37% of Americans would struggle to cover a $400 emergency expense without borrowing money or selling something. This financial vulnerability often stems not from insufficient income, but from bad spending habits that silently drain our resources day after day.

Think of your finances as a leaky bucket. You can keep pouring more water (money) into it, but if you don't fix the holes (bad spending habits), you'll never fill it up. These habits aren't just financial problems—they're behavioral patterns that affect your mindset, career trajectory, relationships, physical health, and emotional wellbeing.

The good news? Unlike many financial challenges that feel beyond our control (economic downturns, unexpected medical bills, etc.), bad spending habits are entirely within your power to change. By identifying and transforming these habits, you can create a financial foundation that supports rather than undermines your life goals.

In this article, we'll explore:

The 10 most common bad spending habits that sabotage financial wellness
The surprising psychology behind why we develop these habits
Science-backed strategies to break these habits for good
How to use AI technology to create a personalized plan for financial habit transformation
A simple, gamified tracking system to make your new habits stick

Are you ready to break free from the bad spending habits holding you back and develop the financial discipline that leads to true prosperity? Let's dive in.

Why Do I Have Such Bad Spending Habits?

The answer lies in the complex relationship between our brains, emotions, and money. Our spending behaviors are rarely just about numbers—they're influenced by:

Dopamine-driven decisions: Shopping triggers the reward center in our brain, creating a temporary "high" similar to what's experienced with certain addictive substances. This biological response can override logical financial thinking.

Emotional regulation: Many of us use spending as a way to manage difficult emotions like stress, boredom, or sadness. This becomes particularly dangerous when it forms a habitual response to emotional discomfort.

Social conditioning: From childhood, we absorb messages about money from family, friends, media, and society. These often unconscious beliefs shape our spending behaviors far more than our logical understanding of financial principles.

Present bias: Humans naturally prioritize immediate rewards over future benefits—a cognitive tendency that makes saving difficult and impulse buying all too easy.

According to bad spending habits statistics, 96% of Americans confessed to impulse buying, and 84% justified unnecessary purchases with phrases like "I deserve it" or "I'll treat myself.

Nearly 65% of Americans reported feeling stressed about money. This stress creates a vicious cycle: financial anxiety leads to emotional spending, which worsens financial situations, creating more anxiety.

Impact on your core areas of life

The effects of poor spending habits extend far beyond your bank account, influencing all five core areas of life:

Mindset: Financial stress clouds decision-making and diminishes your sense of possibility and control.
Career & Finances: Debt and financial instability limit career choices and entrepreneurial opportunities.
Relationships: Money conflicts are among the leading causes of relationship tension and divorce.
Physical Health: Financial stress is linked to sleep problems, headaches, digestive issues, and high blood pressure.
Emotional & Mental Health: Money worries contribute significantly to anxiety and depression.

Understanding these connections helps us see why transforming our spending habits isn't just about growing our bank accounts—it's about creating the foundation for a more balanced, fulfilling life.

The 10 Most Common Bad Spending Habits

Let's dive into the 10 bad spending habits that might be silently draining your finances. By identifying which ones resonate with your situation, you'll take the first crucial step toward financial transformation.

1. Emotional Spending

We've all been there—you had a rough day at work, so you "treat yourself" to something nice. Or maybe you're feeling down, so a little retail therapy seems like the perfect pick-me-up.

This emotional spending creates a dangerous cycle: you spend to feel better, experience temporary relief, then feel guilt or anxiety about the spending, which triggers more negative emotions...and potentially more spending.

Quick Fix: Create a 24-hour rule for any non-essential purchase. When the urge to buy strikes, put the item on a wishlist and wait a full day before deciding. This cooling-off period helps the emotional intensity subside, allowing your rational brain to make the decision.

2. Living Without a Budget

Do you know what is the 45-35-20 rule? It's a budgeting framework where 45% of your income goes to necessities, 35% to wants, and 20% to savings and debt repayment. Whether you use this or another method like the popular 50-30-20 rule, having some budgeting system is crucial.

Without a budget, you're essentially navigating your financial life blindfolded. You have no clear boundaries for spending, no plan for saving, and no way to track progress toward your goals.

Quick Fix: Start with a simple budget that tracks just three categories: Fixed Expenses (rent, utilities, loan payments), Variable Necessities (groceries, gas, basic clothing), and Wants (entertainment, dining out, shopping). Aim to reduce your "Wants" category by just 10% this month and transfer that money directly to savings.

Learn more: 10 Better Money Habits for Financial Success

3. Unused Subscription Services

The average American spends $219 monthly on subscription services, yet uses only about 50% of them regularly. From streaming platforms to premium apps, monthly box subscriptions to gym memberships, these recurring charges create a steady drain on your finances that often goes unnoticed.

Quick Fix: Conduct a subscription audit. List every recurring payment on your credit card and bank statements. For each one, ask: "Have I used this in the last month? Does it bring me joy or value worth the cost?" Cancel those that don't make the cut, and consider rotating between similar services (like streaming platforms) rather than keeping them all active simultaneously.

Dinners at expensive restaurants, destination bachelor/bachelorette parties, and coordinated group purchases can quickly derail your budget when you're trying to keep up with friends or colleagues. The fear of missing out (FOMO) is a powerful driver of bad spending habits that prioritize short-term social inclusion over long-term financial health.

Quick Fix: Practice saying "I'd love to, but it's not in my budget right now." Then suggest an alternative that you can afford. True friends will respect your boundaries. For larger social expenses (like trips), create a separate savings fund specifically for these occasions, allowing you to participate without derailing your finances.

5. Neglecting Emergency Funds

According to financial experts, you should have 3-6 months of living expenses saved for emergencies. Yet nearly 40% of Americans couldn't cover a $400 emergency without borrowing. Without this financial buffer, unexpected expenses send you straight into debt, derailing any progress you've made toward financial stability.

Quick Fix: Start small. Set up an automatic transfer of just $25 per paycheck into a separate emergency fund account. Apps like Chime, Oportun, or Qapital can help automate this process, making it easier to build your savings without manual effort.

As this becomes comfortable, gradually increase the amount. The key is making it automatic so you don't have to make the decision each time.

6. Unmanaged Credit Card Use

Credit cards aren't inherently bad—they can build credit, offer rewards, and provide purchase protection. The problem arises when you use them without a clear plan to pay off the balance. Carrying credit card debt from month to month is one of the most expensive bad money habits, with interest rates often exceeding 20%.

Quick Fix: If you're carrying balances, focus on paying off your highest-interest card first while making minimum payments on others. For new purchases, adopt the rule: "If I can't pay for it in full when the statement comes, I don't buy it with credit."

7. Frictionless Spending

One-click purchasing, saved credit card information, and digital wallets have removed the friction from spending. When buying is effortless, you bypass the natural pause where your brain might consider "Do I really need this?"

Quick Fix: Add deliberate friction to your spending process. Remove saved payment information from online stores, delete shopping apps from your phone, and unsubscribe from retailer emails that tempt you with sales and promotions. Sometimes, the small hurdle of having to enter your credit card information is enough to break the impulse-buying spell.

8. Confusing Wants with Needs

That designer coffee isn't a need, no matter how much your morning brain tries to convince you otherwise. When you mentally recategorize wants as needs, you give yourself permission to spend on non-essentials while potentially neglecting true necessities or savings.

Quick Fix: For each purchase, ask yourself: "What would happen if I didn't buy this?" If the answer involves serious consequences (going hungry, losing housing, inability to work), it's a need. If the consequence is merely disappointment or inconvenience, it's a want. This doesn't mean never buying wants—just being honest about what they are.

9. Choosing Price Over Value

Purchasing the cheapest option often costs more in the long run if it means frequent replacements. Whether it's clothing, furniture, appliances, or tools, choosing quality for items you use regularly can actually save money over time.

Quick Fix: Apply the "cost per use" formula. Divide the price by the estimated number of times you'll use the item before it wears out. A $50 shirt worn 100 times costs 50 cents per wear, while a $20 shirt worn 10 times costs $2 per wear. For items you use daily, investing in quality often makes financial sense. Try wardrobe apps such as Whering and Stylebook, which can help track and analyze your clothing usage.

10. Avoiding Financial Education

Perhaps the most dangerous bad spending habit is not investing time and resources in improving your financial literacy. When you don't understand basic financial concepts, you're more vulnerable to mistakes, predatory practices, and missed opportunities for growth.

Quick Fix: Commit to just 15 minutes daily of financial education. Follow reputable financial experts on social media, listen to personal finance podcasts during your commute, or read a few pages of a recommended money book before bed. Small, consistent efforts to improve your financial knowledge compound dramatically over time.

Read About: 50 Bad Habits Everyone Should Quit

How to Break a Bad Spending Habit (Step-by-Step)

Breaking a bad spending habit isn’t about being more disciplined—it’s about being more strategic. The goal isn’t just to stop a behavior, but to build a system where the right actions become automatic—and the wrong ones feel inconvenient. Here’s how to do it:

Step 1: Identify the Habit Loop

Every bad spending habit is part of a loop: Cue → Craving → Response → Reward

Let’s say you feel bored (cue), crave excitement, open Amazon (response), and buy something (reward = dopamine). Your job is to disrupt this habit loop.

How:

Write down when and why you typically overspend
Identify what triggers the habit—emotions, environments, apps, or social pressure
Define the reward you’re seeking (dopamine, comfort, relief, connection)

Learn more about Cue-Craving-Response-Reward Technique

2. Replace the Routine

You can’t just erase a habit; you have to replace it with something that satisfies the same need. If you're buying coffee out of habit, bring your own and put the savings toward a Friday reward. If shopping is your escape from stress, swap it with a walk, journaling, or a funny YouTube playlist. Make this new routine more attractive than the old one.

3. Add Friction to the Bad Habit

Willpower fades. Friction sticks. Delete shopping apps from your phone. Turn off “Buy Now” buttons. Remove saved credit card info from websites. Use tools that force a 24-hour delay on purchases. You’re rewiring the environment so the impulse has to work harder to succeed. That’s how you make bad habits harder to follow by design.

4. Automate the Good Habit

Make saving the default. Set up automatic transfers to a separate savings account the moment your paycheck hits. Use a budget app with push reminders before you shop. Move extra cash into a “No Touch” account every time you skip an unnecessary purchase. The easier your system works without you, the faster it builds financial momentum.

5. Track Progress Visually

Your brain loves seeing progress. Use a Weekly habit tracker to visualize your progress. Each small win gives you a dopamine hit that reinforces the behavior. This visual feedback loop builds consistency and discipline over time.

6. Make It Rewarding

Good habits need to feel good, or they won’t last. Celebrate when you hit $100 saved. Treat yourself to something meaningful—but within your financial plan. Share your wins with friends or on social media for an extra boost of accountability and encouragement.

You don’t need a perfect system—just a better one than yesterday. Habits don’t change overnight, but when your environment, routines, and rewards are aligned, your momentum becomes unstoppable.

✅ WANT AN APP THAT DOES ALL THIS FOR YOU?

Everything you just read—tracking your spending triggers, replacing routines, adding friction, and gamifying your progress—is already built into the WEEKLY HABIT TRACKER APP by Moore Momentum.

It’s a science-based, gamified, AI-personalized system that helps you break bad habits and build better ones in all 5 core areas of your life, from your mindset, health, to your finances.

Use it to:

🔄 Track your money habits and triggers
🔒 Make bad habits harder and saving automatic
🎯 Get visual rewards as you build momentum

Ready to stop the cycle of bad financial habits and build real momentum? Download our habit tracker app now.

Final Thoughts:

You’re not broken. The system you’ve been living in is.

Bad spending habits aren’t about being lazy or irresponsible—they’re often invisible defaults that hijack your behavior. But with a few smart tweaks, you can build a system where the right financial choices happen almost automatically.

Start small. Pick one habit from this list. Apply the three momentum methods. Use the prompt. And track your wins.

Over time, the changes you make today will stack up into a future where you feel in control, confident, and financially free.

You don’t need to be perfect—you just need to start.

FAQS About Bad Spending Habits

What Is a Word for Bad Spending Habits?

A common term for bad spending habits is financial self-sabotage. Other related phrases include impulsive spending, money leaks, and destructive financial patterns.

What Are Some Bad Spending Habits Examples?

Impulse buying things you didn’t plan for, especially online
Ordering takeout regularly instead of cooking at home
Paying for unused subscriptions (gym, streaming, premium apps)
Using credit cards for non-essentials without a plan to pay them off
Shopping as a coping mechanism for stress, boredom, or sadness
Trying to keep up with friends through overspending on social events
Failing to track spending, which leads to mindless money leaks
Making only minimum payments on debt, increasing interest over time

Bad Spending Habits for Students

Eating out daily instead of cooking or using meal plans
Impulse buying during exam stress or boredom
Relying too heavily on credit cards without budgeting
Overpaying for textbooks without checking for cheaper or used options
Buying trendy tech or clothes to keep up with peers
Skipping student discounts or budgeting tools available on campus
Failing to track spending, which leads to end-of-month panic