IF you’re wondering where your money’s going each month, it might not be big bills or bad luck to blame but small, repeated mistakes that add up fast.
From letting your savings sit in low-interest accounts, to underestimating the real cost of long mortgage terms, financial experts warn that common habits could be quietly emptying your bank accounts.
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We asked money experts and behavioural scientists to reveal the biggest habits that are holding people back.
1. Not knowing what’s coming in and going out
It’s hard to feel in control of your money when you don’t know where it’s actually going.
Many people assume they have a rough idea, but the reality is that forgotten subscriptions, auto-renewing services and small daily purchases quickly add up.
Without visibility, your budget can slowly unravel, and by the time you realise, you’ve slipped into the red.
Vix Leyton, consumer expert at Thinkmoney, says the fix starts with routine: “Take time to know what your outgoings are and what is coming in.
“Some apps, like Thinkmoney, offer a snapshot of what you’re spending, and can even ringfence bill money for you so you don’t accidentally end up facing penalties and late fees.”
Even a five-minute weekly check-in can help avoid nasty surprises and highlight where cutbacks are needed.
2. Living without a savings buffer
It’s hard to save money – but not having a buffer can leave you exposed to high credit when you need cash quickly.
Whether it’s a broken boiler, a car that won’t start or a sudden cut in hours at work, not having a cushion means falling back on credit cards or payday loans just to stay afloat.
The result is a constant feeling of stress, and a budget that can be thrown off by the smallest shock.
Thomas Mathar, behavioural researcher and host of The Money:Mindshift Podcast, says a little slack goes a long way.
He said: “Even a modest buffer, like one month’s rent, can give you the breathing space to make better decisions and avoid high-cost debt.
“It’s not just about the numbers, it’s about having mental and financial slack when life throws you a curveball.”
3. Letting debt pile up month after month
More and more people have credit card debt, which means it can be easy to think it’s business as usual, especially when the minimum payments are low.
But ultimately, you’re paying interest to the bank instead of putting that money toward your own goals. Over time, that can add up to hundreds or even thousands of pounds in lost savings.
“Too many people accept credit card debt as a normal state of affairs. It’s not,” says Mathar.
“Paying down high-interest debt quickly is one of the most powerful things you can do for your long-term well being. It’s buying yourself back freedom, and peace of mind.”
If you’re juggling multiple debts, focus on the most expensive ones first and look into 0% balance transfer options if your credit score allows.
4. Having psychological armour to support you
In the age of side hustles and flashy online success stories, it’s tempting to ditch steady work for riskier pursuits.
But without a reliable income it’s hard to build long-term security.
Inconsistent earnings often mean falling behind on bills, using credit to bridge the gap, and struggling to plan ahead.
Mathar warns that it’s important to have some sort of regular income, even if you’re pursuing other hustles on the side.
He says: “A steady income isn’t just about covering bills, it’s psychological armour.
“When you’re living month-to-month or under-earning compared to your potential, the stress compounds.
“You don’t need to chase big money, but you do need income that’s ‘good enough’ to support a resilient, happy life.”
5. Leaving savings in a dead-end account
You might feel good about putting money aside, but if it’s sitting in an easy-access account earning barely any interest, your savings are losing value in real terms.
With inflation still high, the cost of leaving cash in low-yield accounts is higher than many realise.
Adam French, head of news at Moneyfactscompare.co.uk, says this mistake is all too common.
Adam said: “The likes of HSBC, Lloyds Bank, Santander, NatWest and Barclays all have easy access accounts paying around 1.1 to 1.2 per cent interest, far below the typical returns savers could expect, which is currently 3.51 per cent.”
The top performing options can pay even more, and shopping around and switching accounts only takes a few minutes online.
How to effectively manage your money
Kara Gammell, finance expert at MoneySuperMarket, gives tips on how to get a handle on your finances so you have more left for saving,
If you’re struggling to get a grip on your finances, the way to start is to do a proper inventory.
Try Emma, the money management app, which uses open banking to combine information from all your bank accounts, savings accounts and credit cards, plus investments. The app then highlights any wasteful subscriptions and costly debt and helps streamline your savings.
What’s more, it analyses your personal finances and recommends ways to conserve money so that you can get on track financially more easily than ever.
If you want to have a deep dive into your spending habits, go through your bank statement at the end of each month and give every purchase a rating of one, two or three.
Mark with a ‘one’ any purchases that didn’t make you feel good; give a ‘two’ rating to things that felt ‘sort of good but indifferent’; and mark with ‘three’ any purchases that you would make all over again in a heartbeat.
You’ll be surprised by what you learn.
- Monitor your credit report
From overdrafts to loans, credit cards, mobile phones and mortgages, it can be hard to keep track of your finances, and it can be all too simple to find yourself in the dark about how much debt you have in total.
But this information forms your credit score, which is used by lenders to determine whether you’ll be offered competitive rates and offers for financial products, or even whether you will even be accepted when you make an application.
I use MoneySuperMarket’s Credit Score tool, which is a free credit report tool that lets me see all my account balances in one place.
I’m automatically notified when my credit report is updated monthly, which can be a huge help in avoiding any financial problems from spiralling and means I always know what my overall financial situation is.
The tool also suggests ways to improve your credit score, so you’re more likely to be offered competitive interest rates, which helps you save money in the long run.
6. Not making the most of your ISA allowance
More savers than ever are being hit with tax bills they could have avoided.
Frozen tax thresholds mean that even modest savers can end up over the personal savings allowance, paying tax on any interest they earn.
That means, if you’re not using your ISA allowance, you’re potentially giving money away for free.
French explains: “Saving and investing are some of the best ways to build wealth over time.
“But it’s important that savers are aware of their tax liability on any profits they make – which can add up over the course of a few years.
Plenty of savers can avoid this tax bill by making use their yearly ISA allowances.
You can save or invest up to £20,000 a year tax-free, and every pound sheltered from tax is a pound that keeps working for you.
7. Only saving for retirement, and nothing else
Putting money into a pension is smart, but it shouldn’t be your only savings plan.
Many people now take career breaks, retrain, care for relatives or start businesses, and those transitions need funding too.
Mathar says ignoring this reality can leave people exposed.
“We don’t live three-stage lives anymore – education, work, retirement… A ‘transition fund’ – even just a few months’ salary – makes those big life pivots possible without financial panic.”
8. Being too harsh on yourself when things go wrong
Money mistakes happen. But too often, people fall into a cycle of guilt and avoidance, especially if they’re already struggling.
That mindset can stop you from facing your finances or reaching out for help, which only makes things worse in the long run.
Mathar believes the solution starts with self-empathy. “Here’s the truth: we’re all a bit messed up when it comes to money.
Our brains are wired for short-term wins, not long-term planning.
The goal isn’t to be perfect with money; it’s to build enough slack, mental and financial, so that one mistake or setback doesn’t knock you flat.”
9. Not overpaying your mortgage when you could
With mortgage rates still high and household budgets under pressure, many borrowers are choosing longer terms to keep monthly payments manageable.
But unless you’re also making overpayments, that strategy can come at a serious long-term cost.
French says small changes now can lead to huge savings later: “Overpaying by £200 per month on that same £250,000 40-year mortgage could shave almost 13 years off the mortgage term, saving them around £123,000 in interest payments.
“This is all without being tied to having to consistently make higher payments every single month – boosting the flexibility of their budget and their financial resilience.”
Most lenders allow up to 10 per cent overpayment each year.
Even £50 a month can help you become mortgage-free sooner and pay far less in interest overall.
Top tips for becoming an ISA millionaire
SAVING into a stocks and shares ISA can help you build wealth faster over the long term than cash savings. Dan Coatsworth, investment analyst at savings platform AJ Bell, gives his advice…
- Start as early as you can
Time in the market is important, not just so you can ride the market ups and downs but also to let your wealth build up.
Not everyone can afford to invest the full £20,000 ISA allowance each year, particularly younger people who might be on a lower salary.
The trick is to start as early as possible with what you can afford to invest. Increase your contributions as you get older, such as when you get a pay rise.
- Maximise your contributions
Try to invest as much as you can each month once you’re sure all the essentials are covered.
Create a budget so you can pay bills in full and clear any expensive debt, such as personal loans or credit cards.
The remaining money can be used to fund your lifestyle and to top up your ISA.
- Be consistent with contributions
Feeding your account on a regular basis means you get into the habit of squirrelling money away for your future.
After a while you get accustomed to that money going into your ISA that you may not even think about alternative uses for it, such as going shopping or down the pub with your friends.
- Keep an eye on costs and charges
Costs can add up over time and eat into your returns. Try not to fiddle too much with your portfolio as trading in and out of investments incurs transaction charges.
It is important to be patient with investing, especially for someone hoping to be an ISA millionaire as the journey to build up this wealth could last for decades.
Having a diversified portfolio is good practice for any investor and essentially means keeping different types of investments to help balance out the risk.
Then if something goes wrong with one of your investments, you’ve got the rest to hopefully act as a cushion to minimise the pain.
Diversification can involve investing in different industry sectors, geographies and asset types. For example, a diversified portfolio might have exposure to shares, funds and bonds from around the world.
Companies and funds often pay dividends every three to six months.
Think of these as rewards for taking the risk of owning their shares or fund units. While it can be tempting to pocket that income stream to spend on yourself, history suggests one of the biggest contributors to investment returns is reinvesting dividends back into your account to grow wealth faster.