There’s an ancient quote by Aristotle that says, “We are what we repeatedly do.” This is especially true when it comes to our lifestyle, work, and importantly, our money. However, while good money habits like budgeting and saving can pave the way to financial success, bad money habits derail even the best wealth-building intentions. As we head into 2025, it’s the perfect time to reflect on these behaviours and commit to breaking the patterns that hold us back.

Here are four bad money habits to leave behind in 2025 and actionable strategies to help build a stronger financial future.

Living Beyond Your Means

A New Year’s Resolutions study by Fidelity found that most Americans plan to focus on living within their means and building up emergency savings in 2025. Anecdotally, the same can be said about Jamaicans given the rising cost of living since the pandemic. If you live beyond your means, chances are you spend more money than you earn, frequently exceed your budget, have minimal savings or struggle to pay off your monthly credit card balance. Impulse spending and overreliance on credit card debt can derail your financial security and merely postpone the inevitable reckoning with mounting debt.

To avoid living beyond your means in 2025, consider creating a budget and sticking to it. Ensure your expenses align with your income and avoid unnecessary debt. You can use simple pen and paper, spreadsheets on your computer or budgeting apps to track your spending and identify areas where you can cut back. Prudent budgeting can free up resources to increase the funds you have available for investing and exploring new opportunities.

Not Setting Financial Goals

Without financial goals, it’s easy to spend money aimlessly on things that do not align with your ability to build long-term wealth and financial freedom; after all, as the saying goes, “If you aim at nothing, you will hit it every time.” Financial freedom means having the resources to pursue your passions and enjoy life on your terms, but it requires planning and discipline. The key to achieving financial freedom is defining very specific and quantifiable terms what financial freedom means to you and having a clear plan and timeline within which you want to achieve it. This means having S.M.A.R.T. goals that are Specific, Measurable, Achievable, Realistic, and Time-bound. An example of a smart goal is to save J$500,000 over the next two years to make a down payment on a four-million-dollar vehicle. This goal is specific (saving for a deposit on a vehicle), measurable ($500,000), achievable (based on your income and budget), relevant (aligned with your aspiration to own a vehicle), and time-bound (two years).

For 2025, whether your financial goals include saving to buy a home or car, paying down debt, financing your children’s education or whatever they may be, write them down. Organise them into short-term (1-2 years), medium-term (3-10 years), and long-term (10+ years) objectives. Break your financial goals into smaller, actionable steps and be clear on the timeline within which you want to reach them. This will help you to better track your progress and stay motivated.

Misusing Credit

Credit cards can be a powerful tool when used wisely, but relying on them to fund your lifestyle is a recipe for financial trouble, often ending with you in a debt trap! Many underestimate how quickly high interest rates — sometimes as high as 66 per cent can balloon your debts, making it increasingly difficult to clear over time. According to Bank of Jamaica (BOJ) data, in October 2024, credit card debt in Jamaica reached $83.9b, a 56 per cent increase over five years. This highlights a growing reliance on credit card debt and the critical need to manage debt effectively.

Consider starting 2025 with better credit card management. If possible and where applicable, pay off your credit card debt in full each month. Create a plan to clear your outstanding debt. If you find it difficult to use your credit card responsibly, consider using your debit card or cash for everyday purchases that stay within budget and align with your financial goals.

Neglecting Financial Education

Bad money habits often stem from a lack of understanding about how money works. Schools rarely teach financial literacy, yet this knowledge is essential for long-term wealth creation. As investment legend Warren Buffett famously said, “The best investment you can make is an investment in yourself. The more you learn, the more you’ll earn,” which goes to the heart of financial literacy. Your financial education should cover four basic pillars: budgeting, saving, debt management, and investing. It’s never too late to start, and by mastering these pillars, you’ll be better positioned to informed decisions and set yourself up for long-term success.

To build your financial education in 2025, dedicate some of your leisure time to learning about personal finance. For starters, these weekly articles are a good place to begin learning how to approach long-term wealth creation. You can also take advantage of resources like podcasts, financial magazines, books, YouTube channels, and online courses. For those already investing, NCB Capital Markets Limited (NCBCM) provides supplementary content to keep clients informed about market trends and emerging opportunities which can significantly enhance your returns.

Bottom line

Healthy money habits will put you in a much better financial position in the long run. Set clear goals for spending and saving that don’t make you feel as though you’re depriving yourself. While money cannot buy complete happiness, it does however give you leverage to live the life you envision for yourself, not just now but also in the future. But unwittingly practising bad money habits will leave you broke and far away from the goals you want to achieve in the long term. Make 2025 the year you commit to healthy money habits and set the foundation for long-term financial success.

Kimberley Martin – Assistant Vice-President, Corporate Solutions, NCB Capital Markets Limited