5 Money Habits That Will Trigger a Financial Meltdown (and How To Recover)
Written by
Jamela Adam
Edited by
Jenna Klaverweiden
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
It’s not always big mistakes that derail your finances. Sometimes, it’s a few bad habits that slowly pile up, like overspending, ignoring your bills or putting off saving “just for now.” Left unchecked, those habits can trigger a financial meltdown before you even realize what’s happening.
Here are some common money habits that can mess up your financial health and what to do if you’re already in the thick of it.
Letting Lifestyle Creep Affect You
“One of the most damaging money habits I see is lifestyle creep,” said Melissa Murphy Pavone, CFP, CDFA, founder of Mindful Financial Partners. Lifestyle creep is the gradual increase in spending as income grows. “It’s sneaky and emotionally satisfying, which is why it’s so easy to justify,” she explained.
The problem is that these incremental upgrades can outpace your long-term goals. You might feel financially stable at the moment, but without intentional saving, investing or planning, you’re quietly derailing your ability to build wealth, retire comfortably or navigate unexpected expenses.
To avoid lifestyle creep, Pavone suggested automating your savings and retirement contributions before you see the extra income in your checking account. She also recommended linking new spending to values-based decisions, and asking, “Does this align with what I want most in life?” not just “Can I afford it?”
Saying ‘We Can’t Afford It’ (Even When You Technically Can)
This phrase might feel harmless, but saying “We can’t afford it” all the time can quietly build a scarcity mindset, especially if it’s not really true.
“This one sentence wires your brain for scarcity. It creates a belief that money is never safe, never enough, and conditions you to shrink, avoid or self-sabotage,” Pavone explained. In other words, it’s harmful because it reinforces guilt around spending and blocks people from making empowered financial decisions.
To break this habit, Pavone suggested replacing it with more expansive language, like “How can I create the money for this?” or “It’s not a priority right now, but it could be.” You’ll also want to start tracking your money from a place of clarity, not punishment.
Avoiding Your Bank Account
Avoiding looking at your bank account might feel like self-preservation, but it’s actually one of the fastest ways to lose control of your money.
According to Kim Kent, money coach at Coaching With Kim Kent, avoidance often leads to overspending, missed payments and a complete lack of control. “To break this bad habit, reframe it as ‘checking in with your money’ — like a relationship. You don’t need to micromanage your finances, but regular check-ins can help build better trust with your money,” she said.
Carrying Credit Card Debt Long Term
Carrying credit card debt is also very damaging to your financial situation. “If you have been paying only minimums on your credit cards for over six months, you need to really take a hard look at your budget,” said Ashley Morgan, attorney and owner of Ashley F. Morgan Law.
The longer you carry a balance on your credit card, the more it compounds. According to Forbes Advisor’s weekly credit card rates report, the average credit card interest rate is 25.37%. That’s not cheap at all. So if your income isn’t expected to increase anytime soon, you’ll want to take a hard look at your spending and identify areas where you can cut back.
And if, after reviewing your budget, it seems unlikely you can pay off the debt within the next three years, it may be time to consider more serious solutions, like debt consolidation, working with a credit counselor or even bankruptcy.
Relying on Future You To Fix Everything
It’s easy to assume that a better-paying job, next month’s budget or your “future self” will clean up your current money mess (but that kind of thinking is dangerous).
Nothing in life is guaranteed. Many people assume that they’ll have more time, more money or more clarity later, but often they don’t. So if you’re putting off investing, avoiding your debt or delaying building an emergency fund, you’re only prolonging the problem.
To shift this mindset, start with one small action today, even if it’s just automating a $50 transfer to savings or reviewing your last month of expenses.
More From GOBankingRates
