Kick these bad financial habits to the curb to free up money each month.

3 minute read

Are you short on money every month? If so, bad money habits could be the culprit. Like most bad habits, you’ve probably gotten used to the financial practices that keep you in the red. Maybe you’ve even decided that scraping by each month is just a fact of life.

If you’re struggling financially, it’s not too late to find ways to free up more money each month.

Here are six tips for cutting bad money habits out of your life so you have more money to save or spend on things that you enjoy or milestone purchases like a new home.

1. Not having a budget

How can you save money when you’re not sure where it’s all going? Sure, creating a monthly budget seems daunting. But it’s not like you have to spend a Saturday morning sweating over figures scrawled on a legal pad anymore.

There are plenty of budgeting apps such as Mint or You Need a Budget (YNAB) that make it easy to create a budget and stick to it. Some budgeting apps also track spending, help you come up with a debt payoff strategy and send notifications when payment due dates are near.

Find out: Build a Budget that Works for Your Goals

2. Living beyond your means

If you’re running out of money between paychecks, you’re probably living beyond your means. Maybe you can’t afford the car payment on that expensive car. Perhaps the high rent for your posh apartment eats up more than half your monthly income.

To free up money, consider downsizing to a more affordable vehicle or housing you can easily afford. Cut back on dining out and entertainment, preparing more meals at home. Take advantage of the many free music and other festivals going on this summer.

Find out: 6 Signs You’re Not Living Within Your Means

3. Carrying too much debt

Are your credit cards maxed out? If so, that’s usually a sign that you’re living beyond your means, especially if the balance includes lots of dining out, vacations, clothing, electronics and other expensive purchases. Even worse, having too much debt can hurt your credit.

High credit card balances hike up your credit utilization ratio. That’s the percentage of total revolving debt you have compared to the amount of your total available credit. Ideally, your credit utilization ratio should be no more than 30%.

Hammer away at credit card debt now to free up more money down the road. Then do your best to keep your credit utilization rate low.

Find out: How to Stay Out of Debt and Prevent Debt Problems

4. Making only the minimum payment

You may think you’re saving each month by paying just the minimum payment on your credit cards. But that strategy is only prolonging your debt burden misery. Plus, you’re paying interest each month, which may actually increase your balance.

To get a handle on making monthly payments that count, input your balance and minimum payment into a credit card interest calculator. That way, you can see how much more — maybe even hundreds or thousands of dollars — you’ll pay over time when making only minimum payments.

Find out: How to Escape a Credit Card Minimum Payment Trap

5. Taking credit card cash advances

Swinging by the nearest ATM for a quick cash advance on your credit card is convenient. But you’ll pay for that convenience in a couple of ways that can add up quickly. For starters, your credit card issuer may charge up to $20 or more in upfront fees on a cash advance.

The bank that owns the ATM may also charge its own service fee. You’ll also pay a higher interest rate on a cash advance, sometimes more than 25%, according to major credit bureau Experian.

Find out: What is a Cash Advance and is it a Good Idea to Get One?

6. Wasting gas on errands

With the national gas price average at around $5 a gallon, you’re wasting gas — and a lot of money — every time you hop in the car to run a single errand. Instead of making multiple trips to the grocery store, appointments, the gym and everywhere else you need to go each week, plan ahead to combine several errands into one trip.

Maybe you could stop at the grocery store on the way home from work or the gym. If you’re going out with a friend, schedule a few errands along the way. Make a list of weekend errands and map out a timeline for getting them all done in one trip.

Find out: 8 Ways to Save Money at the Gas Pump

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About the Author

Deb Hipp

Deb Hipp

Deb Hipp is a full-time freelance writer based in Kansas City, Mo. Deb went from being unable to get approved for a credit card or loan 20 years ago to having excellent credit today and becoming a homeowner. Deb learned her lessons about money the hard way. Now she wants to share them to help you pay down debt, fix your credit and quit being broke all the time. Deb's personal finance and credit articles have been published at Credit Karma and The Huffington Post.

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