I’ve always been fascinated by how our personal habits can significantly impact our financial trajectory.
Sometimes, it’s the little routine splurges—like that fancy coffee we pick up before work each day—that hint at deeper money issues. Other times, it’s the major decisions—like going for the brand-new car because we believe we deserve to drive something shiny—that knock us off course.
And if there’s one person who isn’t afraid to call out our bad financial behavior, it’s Dave Ramsey. He’s pointed out several common money mistakes that can keep folks in a cycle of stress and strain.
Today, we dive into five of these mistakes that Ramsey highlights. If you’ve ever found yourself in a paycheck-to-paycheck grind, this one is for you!
01 Not living within your means
I remember the phase in my mid-twenties when I thought upgrading every aspect of my life would make me happier.
When I got my first raise at the marketing agency I worked for, my immediate thought was: “Time to move into a nicer apartment.” The logic seemed solid—if you make more, you can spend more.
But looking back, my expenses ballooned faster than my income. Before I knew it, I was essentially treading water, feeling like I was doing well on paper but never actually saving anything meaningful.
It aligns with the idea that Dave Ramsey promotes: “{the} typical millionaire lives in a middle-class home, drives a two-year-old or older paid-for car, and buys blue jeans at Wal-Mart.” In other words, wealthy individuals often embrace modest spending habits.
If they’re not out there inflating their lifestyles, why do so many of us feel the need to do it?
For me, it was the allure of “I deserve something better.” But I’ve realized overspending only delays real financial stability. Living on less than I earn now feels far more liberating than constantly trying to catch up. It frees me to invest more in personal growth, experiences, or simply keep a cushion in my savings for life’s curveballs.
02 Buying things to impress others
Have you ever bought something just because it would look good on your social feed or gain you an approving nod from a coworker or friend?
Let’s be fair. I think we all have.
Sometimes the real problem is a mindset issue rather than a money issue. If the driving motive behind a purchase is to get other people’s attention, it might be time to pause and ask: Is it truly worth it?
Dave Ramsey put it bluntly in one of his well-known lines: “We buy things we don’t need with money we don’t have to impress people we don’t like.”
It sounds harsh, but if I’m honest, I’ve been guilty of that. There was a time in my marketing days when I went for the expensive brand of sneakers after a colleague got them. I justified it with, “I work hard, so why not?” But deep down, I was responding to an unspoken social pressure.
One trick I use now when considering a purchase is to ask myself, “Am I doing this because it’s practical and genuinely adds value, or is it purely for show?” The goal isn’t to deny yourself nice things. Rather, it’s to ensure you’re buying for the right reasons.
If showing off is the main driver, that purchase might only bring a fleeting sense of happiness—and a more lasting financial headache.
03 Not having a plan
I used to think budgeting was only for people who were in dire financial straits. Looking back, that assumption was the reason I blew through several years’ worth of decent paychecks without much to show for it.
It wasn’t until I sat down and wrote out a comprehensive budget that I realized how much money simply slipped through my fingers every month.
As Ramsey famously said, “You must gain control over your money or the lack of it will forever control you.” That hit home for me.
A plan isn’t just about restricting yourself or depriving yourself of joy; it’s about creating a roadmap that tells your money where to go instead of wondering where it went at the end of the month.
A basic strategy is to start by tracking your spending for at least one month. Write down every single purchase, from groceries to digital subscriptions. Once you have a clear picture of your outflows, you can categorize and prioritize. Do you really need five streaming services? Or ordering takeout every night?
Having a financial plan also makes it easier to identify areas where cutting back just a little can create a huge ripple effect of savings over time.
04 making impulse purchases
I’ll never forget the evening I ended up with a brand-new (and very expensive) espresso machine I absolutely didn’t need. All it took was a few clicks, some slick ad targeting, and the immediate gratification factor of online shopping.
I reasoned that it would save me money in the long run by reducing my coffee shop visits. But let’s be honest, it was a spur-of-the-moment splurge that didn’t even make sense for my already cramped kitchen.
Impulse buys are often driven by our desire to satisfy short-term cravings. As Ramsey once said: “It is human nature to want it and want it now; it is also a sign of immaturity. Being willing to delay pleasure for a greater result is a sign of maturity.”
That’s a serious reality check for people like me who sometimes wander the aisles of retail stores (virtual or otherwise) looking for something fun to add to the cart.
A habit I’ve started using is the 24-hour rule. If I see something that feels like an urgent must-have, I wait an entire day to see if I still feel the same way.
More often than not, the excitement dims, or I realize there’s a more affordable alternative. That single pause has saved me from countless regretful purchases, which used to be my norm.
05 Unsustainable debt payments
Debt used to feel like a necessary evil to me—especially right after college, when student loans and credit cards were part of normal life.
But I also remember the gnawing anxiety of opening my mailbox and finding those credit card statements. It felt as though I was perpetually behind. I’d make my monthly minimum payments, cross my fingers, and hope something would magically change.
Spoiler alert: it never did, at least not until I made a conscious effort to tackle my debt head-on.
Ramsey advises, “…never to take more than a fifteen-year fixed-rate loan, and never have a payment of over 25 percent of your take-home pay. That is the most you should ever borrow.”
I don’t think it’s an overstatement to say that staying within these boundaries can be a game-changer for many households. If your mortgage or other loans consistently eat up a big chunk of your income, it’s nearly impossible to save or invest.
The solution isn’t to never borrow money at all, but to be extremely mindful of how much you’re borrowing and how much those monthly payments will weigh on your finances. If you’re already knee-deep in debt, it might be time to consider strategies like the debt snowball or consolidation—anything that helps you break free from paying for yesterday’s purchases at the expense of your future.
Putting it all together
At the end of the day, these five mistakes—living beyond our means, buying purely for show, ignoring a financial plan, making impulsive purchases, and taking on unsustainable debt—can be the quiet culprits that drain our bank accounts faster than we realize.
They might seem small when taken individually, but their cumulative effect can keep us perpetually broke or stuck in a stressful cycle.
I find that overcoming these mistakes often starts with a mindset shift. It’s not only about the specifics of how much you earn or how much you owe. It’s about getting honest with yourself, questioning your motives for spending, and setting up a plan that aligns with your long-term goals, not just your short-term desires.
Most importantly, remember that no one’s beyond redemption when it comes to finances. I’m a firm believer that even small changes can lead to noticeable improvements in a relatively short span of time.
If you’ve caught yourself in one—or all—of these traps, that recognition alone is progress. You can make the necessary adjustments, steer clear of these pitfalls, and reclaim control over your money and your future.
And who knows? Maybe you’ll surprise yourself by how quickly you start seeing results. Sometimes, all it takes is a single shift in perspective to make every dollar count.
