Bad Money Habits: Are People Really This Bad With Money?

Lately, I have been devouring content from Caleb Hammer. If you do not know who this guy he is just a man out here doing God’s work. I didn’t know who he was until a couple of days ago myself but when I discovered his content I found a goldmine. His content is centered around giving people financial audits and helping them better their financial education. Clients sit on camera and talk about their situations while Caleb kind of pokes fun at them and makes the conversations both educational and entertaining.

Watching this content has been inspiring, humbling, and confusing which has led me to ultimately write this article.

There is a massive issue in this country and Caleb’s show put how bad it is in perspective to me. People are really struggling with money and lack the education to set themselves up for the future. Before seeing Caleb’s content I had no idea a job like his could exist and in all honesty, it is something that I could see myself doing. 

Key Takeaways

• Building a budget does not have to be difficult, start with a financial audit by downloading your purchases from the last three months

• Before thinking about investing your money, be sure to have at least 3 to 6 months worth of expenses

• Financial education leads to self-empowerment and is a stepping stone in your self-improvement journey

Financial Audits and Financial Education

Since I was 18 I have been budgeting. Now being 26, I have almost 8 years’ worth of experience managing my money and various investment portfolios that I have now grown to over six figures. In some people’s eyes, this is not much but from seeing where I started to where I am today it is a massive accomplishment.

I do not come from money. In all honesty, I come from nothing. The one thing I had going for me as a kid was that I was decent at sports and enjoyed school. Money has always been something I loved to learn about and conversations about it come naturally to me at this point. My mom taught me the bare bones of how to set a budget when I was 18 and I became obsessed with learning everything there is under the sun to know about money, investing, and building strong habits that would help me and my family in the future.

Just being a broke college student used to piss me off. I was tired of having to check if my account was going to have enough for a meal so that I could afford the textbooks I needed. I could only imagine what that would have looked like being a family with kids to feed. The fact that over 50% of Americans cannot afford a $1,000 emergency and there are six-figure job owners out there who live paycheck to paycheck makes me both sad and upset. I want to do something about that.

I believe that financial education should have been taught to everyone way sooner in life. But when you have a society that is educated, you have a society that is harder to control and we all know that the powers that be do not want that. Digital Whale Club’s blog is going to talk about a number of topics related to personal finance, business, crypto, and travel. Let’s dive into some basic personal finance stuff to start.

Most Common Bad Money Habits to Stop [TODAY]

Breaking bad habits is like steering a ship through a stormy sea; it requires steady navigation and the courage to change course. You have to want to change before you can break the bad habits you currently have. Each choice you make when it comes to breaking old patterns creates a ripple effect that can reshape the direction of your life.

When I first started learning about money and how to build good habits around it, I remember a deep sense of empowerment like no other. You don’t even realize it yet. Once the weight of money is taken off people’s shoulders there is an overwhelming feeling of lightness to the way you move.

Here are [4] bad money habits that you need to stop today:

1. Impulse Buying: when you are in the early stages of getting your financial situation better, you will be in a season of saying no a lot. Impulse buying leads to living above your means and can get you in serious trouble with credit card debt.

2. Ignoring Budgeting, Saving, or Investing: Before you even think about investing money, you need to get to the point where you can comfortably have 3 to 6 months’ worth of your expenses saved. If you can cut back on spending and replace unnecessary purchases with putting money into an automated account (for saving or investing ex) Acorns) you can kill two birds with one stone and speed up the process of getting back on track.

3. Keeping Up With The Joneses: Inflating your lifestyle is known as lifestyle creep, we tend to do this as we start to see gradual increases in our wages. Avoid this like the plague. We are social creatures and I believe the challenge of keeping up with other people has been amplified over the past decade due to social media. You are playing your own game, at your own pace, live like it and resist the urge to keep up with others.

4. Ignoring Credit Card Debt: Credit cards seem to be the worst thing that we see with people in poor financial standing. Pay off your credit card debt first because the interest rates on them are much higher than typical loans that are issued. Ignoring your payments, carrying balances from month to month, and overspending because you have a high credit limit makes it harder for you to escape the rat race.

Financial Audits in Three Steps

1. Go to your banking app and find your account statements

2. Download the last three months (should be PDF files) and print these off

3. Go through, line by line. Cut out what does not need to be there.

You need to make sure you are budgeting and keeping your expenses lower than your income. Downloading a budgeting app (Rocket Money) or creating a spreadsheet for yourself will do you wonders.

50/30/20 Rule

The 50/30/20 Rule is a basic budgeting rule that helps you organize your finances so you can better your financial life over time. This rule organizes your money into needs, wants, and goals.

50% Needs

Half of your budget needs to go towards the needs that you have. Some of these needs can include the following:

• Rent or mortgage

• Electric Bills

• Car insurance or car payment

• Groceries

The easiest way to categorize this is by asking yourself what you cannot live without. Minimum payments for your credit cards should be included here if you are carrying this debt.

30% Wants

Wants are things like your subscriptions to your favorite streaming platform or the things you need to fund your hobbies. Going out and eating should be included in this category as well.

20% Goals

To build a good financial future we always want to be taking some kind of action towards our goals. Identifying your long-term financial goals is a crucial first step in the process and should be done while you are actively putting away 10%-20% of your paychecks into savings or some kind of automated investment account.

Actionable Steps to $10,000 Saved or a 6-Month Emergency Fund

1. Audit yourself and see where your money is going

2. Cut out things that are excessive/impulse purchases (Uber Eats, Grubhub, Drinks, Restaurants). If you are serious about saving this much you need to learn to start saying no to things like this for some time.

3. Create a simple budget on a spreadsheet or use a budgeting app. Identify how much your needs & wants cost you each month and identify how much you make

   

   4. Be sure to get to a point where you are cutting unnecessary purchases that lead you to having a positive difference between your income & expenses. Automate saving the differences by putting your money in a savings account with an app like SoFi.

      1. If you cannot cut and still find yourself in the negative, you may need to pick up a weekend job or find a way to upskill so you can create more income. Chances are, you have some kind of skill, find opportunities to do some freelancing or side hustles that can cover your differences and help you shrink that gap.

   5. Continue over a process of months until you reach your goal of 6 months of expenses saved or $10,000.

UpSkilling

You need to take your education into your own hands at a certain point. Upskilling is the process of bettering your personal skills so that you now have the ability to earn more money. If owning a business or getting a higher-paying career is your goal then the only way to get to these points is by taking your education in your own hands and finding ways to better your skills.

How You Fix Bad Money Management

Fixing bad money management is all about foxing your habits and staying disciplined in the process. This is going to be a process but if you take action today, you will be one step closer to your goals. No matter how small of a step you take, you should acknowledge that you are moving in the right direction. We live by this notion that even getting 1% better each day leads to a 365% change in a positive direction over the course of a year.