9 Ways You Are Sabotaging Your Finances and How to Stop

Many people are sabotaging their own financial situation without even realizing it. They may be so focused on just one aspect, like their career, that they are ignoring other parts of their finances. They may be too afraid to address the things that need to be changed, or under the impression that things will somehow work out if they just keep working harder. The truth is that without effort and making deliberate changes, you will not change your financial situation. Learn if you are sabotaging your own finances and the ways that you can stop. 

Failing to Contribute to Retirement

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Although you may not feel any worry or concern now, in the future, you will struggle if you are not contributing to retirement. The sooner you begin, the less you will need to worry. There will come a time when your retirement accounts begin earning more each month than you are contributing and then your savings will really begin to grow. You do not want to rely on Social Security, because it is unclear how that program will be functioning in the future.

Action Steps: 

  • Start contributing up to your employer’s match as soon as you are eligible. Talk to your human resources representative to find out when you can. If you are self-employed or do not qualify open an IRA or another self-employed retirement account.
  • Each year raise the percentage that you contribute until you are up to fifteen percent of your income. You can adjust as you receive raises so that you do not feel like you are missing anything.

Using Your Credit Card and Carrying a Balance Forward

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Unless you are able to pay off your credit card in full each month, it is best not to use your credit card at all. Your credit card balance will slowly rise along with the minimum payment requirement until it is all that you can mange to make the payments. You are giving away your financial future when you carry a credit card balance. It is important to realize just how damaging this can be, because the debt will sneak up on you.

Action Steps:

  • Leave your credit cards at home. If you do not have them with you when you go shopping, you will not be tempted to use them.
  • Create a plan to pay off the credit cards as quickly as possible. This means cutting back on your expenses, setting up a budget and putting extra money toward your debt each month.

No Emergency Fund

An emergency fund is like a life preserver.
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An emergency fund is a like a security blanket. You just feel safer when you have it, but it also protects you so that you can continue to pay your bills when disaster strikes. This can take the stress away from covering a car repair or losing a job. Your emergency fund is there so you do not need to rely on a credit card in these situations.

Action Steps:

  • Start putting extra money into a savings account each month. Build up to $1000 before you focus on getting out of debt.
  • Once you are out of debt save up a year’s worth of expenses. This will cover you through nearly every emergency including losing a job or serious illness where you cannot work.

No Savings

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If you want to achieve goals like opening a business, buying a home or going on dream vacation, you really need savings to make that happen. If you are not working on regularly building your savings account, you need to start. It is important to have a solid habit of saving money in place so that you can make a real difference in your future. This will make it possible to begin to build wealth.

Action Steps:

  • Start by trying to save an extra $20.00 each week that you put into your savings account.
  • Increase the amount you save by looking at your monthly bills and insurance information to see if you can save additional money by switching providers.
  • Shop sales and plan ahead for your purchases so you can get the lowest possible prices.

No Goals

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If you do not have a goal, you do not know what you are working for. It is like going on a trip with no destination in mind. You can wander around, have some fun, but you do not fulfill a specific purpose. Without financial goals, you will not be able to continue to move forward and accomplish things like buying a home, or retiring when you want to.

Action Step:

  • Create a financial plan and set both long-term and short-term goals. The goals may be things like getting out of debt, saving up an emergency fund or buying a home. They should also include long-term goals like paying for you children’s college education and retiring. Break the goals down into smaller steps that you can start taking today.
  • Talk to a financial advisor, once you are out of debt, and determine what type of investments you need to make to reach those goals.
  • Adjust the goals every few years to make sure you stay on track. 

No Budget

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A budget may seem like a lot of work, or you may be frustrated because you never seem to have enough money. It can be scary to budget when you are constantly worried about if you will be able to make ends meet. It is work to budget, but it lays out a plan. A budget allows you to make sure your spending matches your priorities and that you are setting aside money each month to reach your financial goals. It is one of the most important things you need to do if you want to change your financial future.

Action Steps:

  • Set up a budget today to see if you are making enough to cover your basic expenses.
  • Set aside money to cover your financial goals.
  • Find a budgeting system that makes budgeting easier for you. This may be an online system, switching to primarily cash for your expenses, or a software program.

Staying at a Low Paying Job

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A bad job is better than no job right? You may have taken a lower paying job right after college graduation to gain experience or because of a difficult job market. However, staying underemployed and not making enough can be damaging to your future finances. It can limit your earning power, and you may be relying on credit cards to get by. It is important to start looking for a better paying job now.

Action Steps:

  • Start looking for better paying jobs in your company or at a new organization.
  • Take advantage of tuition reimbursement programs if you need to gain additional skills in order to get a better paying job.
  • Create a budget so that you do not rely on your credit cards and consider taking a second job to help make ends meet. 


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If you are consistently overspending, you are stopping yourself from reaching your financial goals. You may also be accumulating debt, especially if you are not paying attention to what you are spending and when. It can be difficult to change this habit, especially if you are not tracking your spending with a budget.

Action Steps:

Bad Habits

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Your bad habits can be expensive and cost you money that you could use to reach your goals. Cigarettes, alcohol, gambling and even compulsive shopping can wrack up the bills and make it difficult to make ends meet or reach your goals. Although you may feel like you can afford these habits or you do not want to quit, it is important to consider whether or not they are worth sacrificing financially in order to keep doing them.

Action Steps:

  • Choose one habit to quit this month. Seek help if you know you will have a difficult time because you are addicted.
  • Set aside money in your budget to cover these habits. Try limiting the amount you spend on each one each week. Make each habit it’s own category. This can help you see how