15 Warning Signs That You’re Making Bad Financial Decisions

It’s time to pay attention to your financial decisions that may be throwing up red flags.
Updated March 6, 2023
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Do you feel like you can never make the right financial decision no matter what you do?

That may be the first sign that you don’t know how to make smart money moves and need to take a closer look at your financial habits.

Check out these red flags that can help you see where things are going wrong and how you can turn them around.

You don’t have a budget

Vitalii Vodolazskyi/Adobe notepad with monthly budget calculations and money

Think of your budget as the foundation of your financial decisions. It can help you identify where you’re saving or highlight spots where you’re losing money.

Without a budget, it’s easier to waste money instead of putting a structure in place to figure out exactly what you need to do to be on sound financial footing.

You’re always stressed about money

Kawee/Adobe asian woman hands holding the head worried about credit card debt

It can be easy to get stressed about your finances when you’re living paycheck to paycheck or make sudden changes to your financial plan to address immediate needs.

But making quick financial decisions under trying circumstances could cause you to execute plans before you think them out and cause more problems.

You’re resisting change

nenetus/Adobe woman shopping online with credit card and laptop

You can create good financial habits by switching away from bad habits and then repeating your new habits over and over until they stick.

But you can only see positive changes if you’re willing to make them. Staying firm on doing the same things that are getting you in a financial hole won’t put you on a better financial path.

You’re paying bank fees

Wanan/Adobe calculator with the word FEES on the calculator

It can be a demoralizing feeling when you have additional fees added to a checking account because you overdrew your account. Your bank may also be adding late fees to your credit card because you haven’t paid your bill.

Paying for fees that you can’t afford may be a warning sign that you need to stay on top of your spending when it comes to checking accounts, credit cards, and other issues with your bank.

Pro tip: If your bank is charging too many fees, shop for a better bank that supports your financial habits and goals.

You're not saving for retirement

Sutthiphong/Adobe interest rate and dividend concept

You may think that you don’t have to worry about retirement since you’re not retiring anytime soon. But saving for retirement when you’re younger can earn you more cash and possibly help you retire earlier than you expected.

It’s also a good idea to check with your employer and see what they offer in terms of a 401(k) account including matching funds, which could help you save more.

Your goals are unrealistic

cn0ra/Adobe financial goals on notepad with calculator

It can be easy to feel like a financial failure if you set goals for yourself that aren’t achievable.

Instead, consider establishing short-term goals that you can achieve with just a little work to keep you motivated and let you take one step at a time toward financial success.

You don’t understand finances

Prostock-studio/Adobe guy in headphones studying with laptop

Budgeting or saving may be things that you don’t have much experience with or don’t understand. You could be setting yourself up for financial failure without basic financial knowledge.

Consider taking financial courses either in person or online. You may be able to even find some free courses to help you save money. A bit of research and learning now could help you for years to come.

You keep saying you'll get to it eventually

kostikovanata/Adobe businesswoman in eyeglasses planning

You know you need to make some financial decisions and you'll do that at some point eventually. But every time you put off a financial decision, you could be setting yourself up for more failure.

So set a specific time to sit down and make sure you have a list of everything you need to look over so you can make good decisions instead of letting them fester.

You're not sure where your money goes

PheelingsMedia/Adobe woman checking receipts at home at night

You get paid for your job and that money goes into your bank account, but then what? If it seems like your money is just disappearing, it may be a good time to sit down and itemize all your expenses.

Make a list of what you’re spending money on and organize it in a way that can help you better understand where you’re money is being wasted and how you can put it somewhere useful.

You fall for get-rich-quick schemes

Stillfx/Adobe american cash banknotes money

If it sounds too good to be true, it probably is. A quick way to make cash or a little bit of money for big guaranteed returns will not help you get ahead financially.

Make sure you think through any potential financial plans and try to make sound thought-out decisions. Falling for scams will just cause you more financial problems rather than fewer ones.

You don’t trust your gut

Nomad_Soul/Adobe woman choosing clothes in clothing store

You may have found yourself standing in a store with an expensive shirt in your hands and that little voice in your head saying “It won’t fit in your budget,” or “Don’t waste your money.”

Sometimes, you should give in and listen to that inner voice. It could be trying to save you from financial issues that you won’t want to deal with later on.

You don’t have an emergency fund

witsarut/Adobe money saving for emergency money and calculator

An emergency fund is an important financial buffer that can cushion any major surprise like a car accident, health issue, or emergency home repair.

Without that cushion, you could end up spiraling into trouble each time an unexpected cost pops up. You could also end up deeper in debt without that fund than if you simply saved a little bit of cash ahead of time to help you.

You’re only paying the minimum on bills

Farknot Architect/Adobe woman holding and choosing credit card to use

Your credit card bill might have a minimum payment due each month that you make sure you pay. But what about that extra balance that you’re not covering?

Those extra balances that you carry over from month to month can add up as well as the interest that they incur the longer you let them sit.

And if you only pay the bare minimum because you can’t afford more, you might want to consider spending less.

You spend money you don’t have yet

dianagrytsku/Adobe man paying with credit card online

You know you’re going to get a big tax refund or a big bonus at work. Perhaps someone owes you money. So you feel free to spend cash on big-ticket items now that will be covered when those checks come in later.

But what happens if you’re tax refund isn’t so big or your company doesn’t hand out bonuses this year? You’re still going to have to cover the cost of what you bought.

If you don’t spend what you don’t have, you can save yourself the stress of having to pay for items with money you don’t have.

You’re losing sleep about your finances

Prostock-studio/Adobe woman suffering from insomnia lying in bed

Worrying about things like your finances could impact your mental as well as your physical health.

If you’re losing sleep or not eating well because you’re concerned about the bills that are piling up, it may be a sign that you need to change some things and get your financial life in order.

Bottom line

itchaznong/Adobe businessman holding saving account passbook with calculator

Are you ready to get back on track when it comes to sound financial choices? Start with a budget that can help you create a strong foundation for your finances and support your plans for the future.

A budget can also help you identify places where you can cut money from your spending habits and where you can save.

You might even be able to build up a strong emergency fund or see if you can retire early if you can find a few key places to make a difference.

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Author Details

Jenny Cohen Jenny Cohen is a freelance writer who has covered a bit of everything, from finance to sports to her favorite TV shows. Her work has been featured in The Wall Street Journal, USA Today, and FoxSports.com.

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