6 signs of poor money management

Managing money is a skill. No one is born knowing how to do it, and not everyone learns as a kid or teen. Millions of adults have poor money management skills. If you're stuck in debt or need help figuring out how to spend less than you earn, you might feel like there's no way out.

At Greenlight, we're dedicated to offering trustworthy financial tips and resources to families of all backgrounds. Let’s help you start making money work for you — no matter where you’re starting from.

The privileged access to financial literacy

Financial literacy — understanding the basics of money management — is essential to thriving in the 21st century. Ironically, access to finance advice is particularly challenging for people who need it most. Struggling parents need more resources to teach their kids about money, and schools often fail at the task.

Students who don't learn financial literacy are more likely to struggle financially as adults. They're more likely to spend above their means, less capable of saving for retirement, and less likely to have emergency savings.

Everyone deserves access to financial education. And if you've struggled to find relevant money tips, "What not to do" is a great place to start.

Key signs of poor money management

Financial management is challenging, especially if you struggle to make ends meet. It can seem like there's no way out of your financial problems. If you're ready to stop making poor money management decisions, here are the habits you'll need to break.

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1. You don't apply budgeting practices

Financial budgeting is the first step to living within your means. It breaks down your "money in, money out" for the month, including:

• How much you make

• Your expenses

• Your savings habits

• How you spend what's left

Creating a budget starts with listing your income and basic expenses — rent, food, health insurance, gas, etc. 

If your income exceeds your expenses, you can decide what to do with the rest. You might save it, put it towards debt, or set it aside for a purchase.

Nervous about doing the math? Countless budgeting apps do it for you. They also help you better understand expenses and ways to save.

2. You have high levels of debt

Debt is part of life. Financial experts even consider some debts "good" — like student loans, which can increase your earning potential.

But what if your debt gets so high you can't keep up, even with the minimum payments? You may have taken out personal loans you can't afford to repay. Or, like 49% of American cardholders, you have credit card debt.

Credit cards make it easy to spend more than you can afford. The minimum payment is usually far less than you've spent that month. If you don't pay the entire balance, the rest becomes part of your account balance — and starts gathering interest.

The higher your debt, the harder it is to pay off. When that happens, it's time to make higher monthly payments. Commit to putting any extra money toward paying off your balances, even if it's just a little at a time.

3. You neglect savings and emergency funds

Around 56% of Americans don't have the savings to cover a $1,000 expense. If that sounds like you, it's time to set some saving goals.

Saving can be challenging, but almost everyone can save something. Just ask the countless dads and moms saving money every day!

Don't worry — we’re not telling you to cut out your occasional $5 latte. Instead, consider your larger expenses and where you can get things for less.

You might find a cheaper car insurance or phone plan. You could also set a clothing or electronics budget and limit your "fun" purchases.

Next, open a high-yield savings account. Deposit what you save every time you lower an expense or cut something from your budget. Then, watch it grow.

4. You spend impulsively and lack financial discipline

Spending is fun, but doing it thoughtlessly can seriously harm your long-term finances. It causes you to rack up debt and can seriously hurt your credit score — a number you get based on how much you owe and whether you pay bills on time.

Sticking to a budget is the best way to curb spending and build healthier financial habits. If you need some extra help, create a personal waiting period. Tell yourself you'll hold off on non-necessities for a week or two. 

5. You neglect retirement planning

Does the word "retirement" make you want to hide in a closet? You have plenty of company. More than a quarter of adults have no retirement savings, and that number is much higher among underserved communities.

As of 2023, only 10% of low-income households have retirement savings, compared to 90% of high-income households. Families from ethnic minorities are also less likely to have retirement savings.

You can empower yourself to break the cycle. Start by researching retirement account options and how to open one. You don't even need a job with benefits.

6. You avoid professional help

Let's clarify: You don't need to be rich to get money advice.

One accessible resource is a financial mentor — someone who helps people set financial goals and make smart money decisions. Think of them as a personal trainer for your money.

With a financial mentor, you can learn to avoid the poor money management decisions that keep you down. You can start making good financial decisions, setting yourself and your family on the road to success.

Recognize the red flags and improve your money management with Greenlight

Financial literacy is an equity issue. Every individual and family should be able to thrive financially, and Greenlight is committing to making that happen.

From money management tips to debit cards and investing for kids and teens, Greenlight is here to help your family live well. Learn more today, and get yourself and your kids on the road to money success.