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When it comes to financial success, the little actions you take on a regular basis add up to make a big impact on your wealth over time. But if those "little actions" include small purchases and daily indulgences, those add up, too – and diminish your ability to save. So it's crucial to learn how to break bad spending habits before they put your financial priorities in jeopardy.

What Counts as a Bad Spending Habit?

Spending money isn't inherently bad. It's when you spend money on things you don't actually value that you run into problems.

Say you tend to eat lunch out every workday. Five times a week, you spend $8 on a meal. At the end of the month, you'll have spent $160 on those lunches. Over the course of a year, nearly $2,000. Consider if you'd rather put that $2,000 to other uses, like a vacation or a serious boost to your retirement account.

If so, you need to break the spending habits that are preventing you from getting what's actually important to you. Besides lunches and coffees, "bad habits" can include impulsive purchases, overspending and buying things that don't add much to your life, like those lunches. Saving your money can enable you to purchase bigger-ticket items or put away more money for a rainy day.

Where to Start

First, you need to understand your current habits. Start by looking at all your transactions from the past three months. You can use bank or credit card statements to help you review.

Highlight purchases you no longer feel good about. Maybe you experienced buyer's remorse after purchasing expensive shoes or a pricey concert ticket. Did you spend a ton on a boutique gym membership and didn't go once? When you know what you want to change about your spending behavior, you can find the right strategy to break that particular habit and reallocate your funds in a way that's more aligned with your long-term goals.

Eliminate Daily Spends and Unused Items

You can quickly cut back on spending by canceling any services, memberships and subscriptions you don't use or rarely use. If you are trying to justify keeping something, consider how much it costs you yearly – and if there's anything you'd rather do with that money. This will give you perspective and help you nail down what really matters to you.

Then look at where you spend money on a daily basis. Maybe it really helps get your week off to a good start when you buy a coffee and enjoy a lunch out on Mondays. It's fine to do that, but make sure that for the rest of the work week you brew your own coffee and bring your own lunch, too.

One fun way to save more is to pay yourself as much as you pay your coffee shop. Every time you indulge, put the equivalent amount into a savings account.

Track Everything

Another good way to learn how to break bad spending habits is to be more mindful with money. Keep all receipts and maintain a budget. If you don't have a budget, there are plenty of budget calculators and free templates out there to get you started.

Budgeting apps allow you to set alerts that can remind you of your goals. You may also find that keeping a budget on paper, rather than digitally, helps it stick in your mind better. Either way, find a system that works for you.

Use Cash

For an extra boost, switch to using cash. You're less likely to make purchases when you need to physically part with money and watch it leave your possession. Using cash can help develop more mindfulness around your money.

Breaking bad spending habits isn't easy at first, but the closer you get to your financial goals, the happier you'll be. Start moving forward today.


This information and recommendations contained herein is compiled from sources deemed reliable, but is not represented to be accurate or complete. In providing this information, neither KeyBank nor its affiliates are acting as your agent or is offering any tax, accounting, or legal advice.

By selecting any external link on, you will leave the KeyBank website and jump to an unaffiliated third party website that may offer a different privacy policy and level of security. The third party is responsible for website content and system availability. KeyBank does not offer, endorse, recommend, or guarantee any product or service available on that entity's website.

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