TAX EXPERT EXPLAINS: Money Habits Keeping You Poor

Money habits that keeping you poor

Over the past decade, I have deeply immersed myself in finance, earning a finance degree, an accounting qualification, and pursuing a career in investment banking. One crucial skill I’ve developed is managing personal finances, identifying poor money habits, and overcoming them. In this discussion, I’ll share nine common bad money habits that can hinder financial progress and provide tips on how to break free from them.

1. Paying Yourself Last

Many learn this concept from the book Rich Dad Poor Dad, which outlines two payment methods: the poor habit of paying yourself last and the rich habit of paying yourself first. Upon receiving a paycheck, instead of immediately paying for rent, bills, and other expenses, allocate at least 10% to your savings as if it were a bill. This ensures you prioritize your financial growth.

2. Comfort with Bad Debt

Today, debt has become normalized for even minor purchases. My strict rule is: if I can’t buy something outright in cash, I shouldn’t be buying it at all. Credit card companies thrive on consumers’ poor financial habits, charging high interest rates that negate any benefits or rewards offered if balances are not paid in full.

3. Ignoring Savings and Investments

Start by saving that crucial 10% of your income to create a financial buffer, then use additional savings to invest. This builds a fund that doesn’t just sit idle but grows over time.

4. Not Knowing Your Income or Expenses

Understanding your financial baseline is essential. Beware of lifestyle inflation where spending increases with income. Successful financial management involves knowing your assets, liabilities, and having a clear financial goal.

5. Expensive Hobbies

While hobbies can enrich your life, they can also be a drain on your finances. If you’re serious about improving your financial status, consider both saving more of your current income and finding ways to increase it. Remember, there’s a limit to how much you can save, but earning potential is unlimited.

6. Paying Excessive Taxes

Taxes are typically the largest expense in your life. By understanding and utilizing legal tax structures and strategies, you can significantly reduce your tax obligations, allowing you to allocate funds according to your values rather than being dictated by external decisions.

7. Procrastinating on Investments

Once you have a savings buffer, it’s critical to invest your money to make it work for you. Diversifying your investments helps you manage different economic situations. Avoid leaving excess money in a bank where it loses value due to inflation.

8. Unawareness of Financial Tools

Investing in tax-advantaged accounts like Isas or Roth IRAs can protect your dividends and profits from taxes, further enhancing your financial growth.

9. Delay in Financial Planning

Many delay investing due to lack of time, money, or knowledge. However, postponing this crucial step means having to work harder later to achieve the same financial goals.


There are always excuses for not investing or saving, but taking control of your finances early sets the foundation for a prosperous financial future. Remember, building wealth isn’t just about making money; it’s about making your money work effectively for you.