Can't Get Out of Debt? Here's 11 Habits You Must Master to Change Your Finances

Following these everyday spending tips can pay off over the long haul.
Last updated March 27, 2023 | By Jenny Cohen Edited By Chris Kissell
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It can be tough to get out of debt once it becomes a fixed part of your budget. Fortunately, mastering a few good habits can get you out of the red and into the black — and keep you there.

Following are some good money habits that can help improve your finances on a daily basis.

Build an emergency fund

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An emergency fund can be invaluable should a surprise expense — such as a health issue, job loss, or home repair — suddenly appear.

Wondering how much to save? Many experts suggest having enough cash to cover three to six months of living expenses.

So, each time you come into money unexpectedly — through a raise or bonus, or as part of a gift, for example — add money to your savings account so it will be there if an emergency strikes.

Live below your means

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Sure, you might make enough money that you can comfortably afford to spend a lot. But that doesn’t mean it’s a good idea to do so.

Living below your means helps you save more money, which can lower your financial stress and bring you tremendous peace of mind.

So, consider buying or leasing a car that is less expensive than what you can really afford. If you’re looking to buy a house, consider homes listed below your maximum price. Or, find a place in an area with a lower cost of living.

Pay off your credit card in full every month

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Credit cards offer you a deceptively easy way to spend money. Slip the card through a reader or click online and you’re all set.

Because they are so easy to use, credit cards make it easy to fall into debt.

Closely track your credit card transactions so you don’t spend more than you can afford to pay. Paying your balance off each month allows you to stay debt-free and avoid penalties or interest on your debt.

Save money from each paycheck

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Spending money is the easy — and fun — part. But learning to save more is crucial to your long-term financial well-being.

Set aside a specific amount of money from each paycheck that you plan to save. Then, think about what you plan to do with those savings. Will you invest them, or put them in a high-yield savings account?

Determine the right answer for you and follow through.

Avoid going overboard on big-ticket item

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Paying more than you need to for big-ticket items is a sure way to blow a hole in your budget.

Remember, you don’t need the fanciest car or the biggest house. Prioritize what you want and need. Then, adjust expectations to meet those must-haves without going overboard.

Wait to buy things until you have the money

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It can be tempting to use a credit card to pay for a dream vacation or to update your work wardrobe. But you will almost certainly be better off if you wait until you have saved the money before you pay for those things.

Research how much the things you want will cost. Then, set that cost as a savings goal. Purchase your item once you have saved the money, and not a moment before.

Shop around and compare prices

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Always shop around and compare prices before you make any large purchases. See if you can get a better deal that will save you a few dollars.

Saving a few dollars here or there might not seem like a big deal, but those extra savings can add up over a long period of time. You'll be surprised how you can make room in your budget for more savings.

Track expenses

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Keeping track of how you spend money and where it goes can help you identify places to save. You might find you waste money on extra, unnecessary things, for example.

There are phone apps that can help you track expenses. Or, perhaps you prefer the old-fashioned pen-and-paper method. Choose the option that works best for you.

Regularly review your finances

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In addition to tracking expenses day to day, set aside time on a regular basis to check on the bigger picture regarding your finances so you can see how you’re doing.

For example, put a reminder in your calendar to look over your finances once a month. Find the right approach for you and make it a habit.

Set financial goals

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Write or type out a list of both your short-term and long-term financial goals. Figure out which are most important to you and which you want to reach first.

Don’t be too general when setting goals — if you want to retire early, name that as your goal and work toward it. Specific goals keep you motivated to stay on course when it comes to saving and spending.

Stay motivated

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It is possible you will have a bad day, week or even month when you spend more than expected.

Dust yourself off and keep going. Make the necessary small adjustments to your budget to get back on track.

You might not have the same level of success every month, but sticking with good habits is likely to pay off and help you stay debt-free in the future.

Bottom line

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If you’re ready to become debt-free, the tips on this list can help get you to that goal.

Start by drawing up a monthly budget and setting goals that will help you save more and spend less. Use at least part of your extra savings to pay down debt.

Even small changes in your spending habits can make a big difference. As your money habits improve, it will also become less likely that you will sink into debt in the future.

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