Are you bad with money? How to know & what to do


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So, you think you’re bad with money. Welcome to the club.

At some point, many people may feel this way. It’s probably no surprise, considering that the average person is given little guidance on how to be good with money.

No matter what you do in life, managing your money is considered imperative to success. But as important as it is, money skills are not taught in many schools or learned from parents and family, leaving you to figure it out on your own.

And self-education can be difficult; there are many conflicting viewpoints that flood the internet. Information paralysis can make it hard to even know where to start.


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So, you give up before you even begin. Maybe, it’s even part of the identity that you give yourself. You’ve decided having bad financial habits is a “truth” about your life.

But that mindset isn’t helping anyone—especially you. Improving your relationship with money is something that is fully within your capacity—and you’re the only one who can make this change. No one cares about your money as much as you do.

Here are tips and tricks for better money management for those that think they’re bad with money. Pick one or two — taking action is one way to get good with money.

Related: How to make smart money moves during COVID-19

Figuring out if you’re bad with money

Sometimes the signs are clear, like getting multiple notifications for overdraft fees in a week. Sometimes, being “bad with money” is less situationally obvious, and is more of just a feeling you get.

While it is different for everyone, this sense can manifest in anxiety, shame or an inability to take action on simple money tasks.

To help determine if you are considered bad with money, here are some bad financial habits you can look out for. If you are engaging in one or more of these habits, it may be time to take action.

•   Living paycheck to paycheck. One telltale sign is that feeling that every week or month is a race to see whether you can make it to the next payday. Sometimes you make it, and sometimes you don’t — but either way, it’s anxiety-inducing.

•   Overdrafting your account. Sometimes, the result of living paycheck to paycheck is finding yourself overdrafting your bank account, which often results in a harsh fee.

•   Paying bills late and missing bill payments. Whether done knowingly or by accident, consistently missing bill payments and racking up those damning late fees is a hallmark of those struggling to manage their money.

•   Debts are growing or staying at the same level. You’re making payments on your debts, but they aren’t getting any smaller. Maybe, they are even growing larger. Ideally, debt balances would move in the other direction.

How to be better with money

Here are some ideas for getting better at money management. They are broken down into the following categories: Money mindset, budgeting, saving and debt repayment.

Money mindset

A big piece of being good with money is having a positive and confident mindset. This is unlikely to happen right away, and it takes ongoing work, but that doesn’t mean that it’s not important. Here are some ways to start thinking about money in a new light:

•   Confronting closely-held beliefs. Spend some time dissecting the previously-held beliefs you have about money. You learn a lot about money from a young age — that money is good or money is evil, for example.

Some people may grow up believing that money is a scarce resource, while others understand money as a tool. There are many numbers of qualities that get assigned to money that are not objectively true.

If you have major fear or shame regarding money, you may want to consider working through these emotions with a financial therapist. Your feelings are valid — but that doesn’t mean you have to live with them.

•   Integrating affirmations into your daily routine. This one is admittedly a bit hippie-dippie, but you may find affirmations to be a grounding part of your day. For example, affirmations such as “I am worthy of wealth,” “I am capable of managing my money” and “There is money out there to be made by me” could act as helpful reminders that you are in charge of your money and not the other way around.


•   Tracking your cash flows. Before you can even build a budget, you need to understand the money that is coming in and the money going out. There is no way to set reasonable budgeting categories without some understanding of your current spending patterns.

You may find it helpful to simply track your spending for a month or two, either by journaling, tracking in Excel or using a service that hooks up to your bank accounts, giving you helpful snapshots into your spending.

This may sound obvious, but it’s Money Management 101: It is ideal that you are not spending more than you are earning or bringing in. To work towards a place where you’re able to spend only money you have on hand, you need to know both how much money you have on hand and the categories where you’re overspending.

•   Finding a budgeting method that works for you. There are many ways to budget, and one is not necessarily superior to another. It’s all about finding a method that works for you — and sticking to it. Budgeting isn’t hard, per se, but it does require diligence. The challenge is making your chosen budget part of your everyday life.

Try taking it back to basics by using a cash-only budget, using cash envelopes or doing zero-based budgeting. Any of these budgets can be used within the very basic budgeting framework of 50/30/20, which is the idea that 50% of your budget should go to necessities, 30% goes to fun spending and 20% goes to savings goals. And while this is a helpful guide, you still need to enact a strategy within this framework.


•   Learning to say no. Most people cannot afford to buy everything they want. That’s just a reality of being alive and having relatively easy access to just about anything you could ever dream of buying.

If you truly want to learn how to be better with money, you need to do some soul-searching and figure out what it is that really matters to you — and say no to the rest. This will help you avoid damaging FOMO spending.

•   Automating your savings. Once you have graduated from being at risk of overdrafting your accounts, the next step is to automate your savings. That means setting an automatic flow of money from your checking account (or wherever your money is deposited) and into accounts designated for saving. This can be done on a monthly (or bi-monthly) basis, a few days after your paycheck hits.

Don’t make saving a chore that you have to remember to do once or twice a month—you’re busy and you might forget. Let technology do the heavy lifting for you.

That way, you can practice the good investor behavior of spending what is left after saving, and not the other way around.

If you’ve never moved a surplus of cash into a savings account after the month is through, it is time to find a better way.

•   Earning more money. Do you feel like you’re cutting back on spending as much as possible, but not getting anywhere? You may need to work on earning more money. There is a limit to what you can cut out, but there is no limit to what you can earn.

This could mean something different for everyone. Maybe this means sitting down with a boss and creating a path towards earning more money. This could entail taking on more responsibility or hitting certain numbers and metrics. For others, this could mean picking up a “side hustle,” whether related to a current career or not.

Understanding (and paying down) your debts

Many bad financial habits are born from the easy access consumers have to money that isn’t theirs — and that they need to pay back, with interest.

•   Listing out all of your debts. The first step in conquering your debts is knowing exactly what you’re up against. In a spreadsheet or on some other document, list out each source of debt that you currently hold.

This includes student loans, credit cards, car loans and any other sources of debt. Include the loan servicer, the size of the debt, the interest rate and the amount and date of the monthly payment on each debt.

•   Learning about interest rates. Interest rates are the cost of using someone else’s money (the bank’s, usually). They might not seem like a big deal, but interest charges can rack up quickly and can make a purchase much more expensive than the initial sticker price.

To get an idea of how interest can impact how much it costs to borrow money, you might find it helpful to play around with interest rate calculators, such as this credit card interest calculator.

Here’s an example of how expensive interest charges can be. Using the calculator, consider $1,000 charged on a credit card with a 16% fixed rate of interest. If you make a $20 payment to the card each month, you’ll pay an additional $659 in interest charges as you make those payments over the course of nearly seven years.

And this is assuming that you don’t add any more money to the credit card while you’re paying off the current balance.

As you can see, getting out of credit card debt is hard work due to interest charges along with the temptation to charge even more to the card, as more room on that credit “frees up” as the balance is lowered.

While you are using the calculator, look at how much money you could save if you were to pay off a loan or credit card faster, or by having a lower interest rate.

•   Making all monthly debt payments, but choose one to focus on. This may be the source of debt with the highest interest rate, or you may opt for the smallest overall balance, giving yourself the psychological victory of kicking a source of debt to the curb. It doesn’t really matter which method you choose—just choose one and get aggressive. Put extra money towards the balance (principal) of that debt.

•   Avoid charging more to credit. Getting better at managing your money is hard to do when you’re adding to your credit card balance. Credit cards are notoriously difficult to pay back when you’re only making the minimum payments, and nearly impossible if you’re doing that while adding to the balance.

Tools for better money management

You don’t have to master all of the above concepts right away. Becoming a person who is “good with money” is a journey.

Consider taking it step by step, starting with one area and moving on to the next as you feel you have mastered each concept.

One place to start is getting organized and staying organized and there are some really great tools for that.

First, track down all of your money, both assets and liabilities. Then, follow it up with a master list that includes all passwords, also considering storing those passwords in a secure place.

Start building familiarity with your financial situation, and look for small ways to improve it every day. You may find it helpful to take a look at accounts once a day or once a week as you are getting to know what your money looks like. This may also help you gain some understanding of your spending habits over shorter periods.

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