People rarely go bankrupt overnight. Instead, it usually happens gradually as a series of poor financial decisions accumulate. Few of us can afford to make many financial mistakes. This includes people with relatively high incomes.
According to YouGov, 36% of American adults who earn more than $100,000 a year struggle to make ends meet. (1)
Meanwhile, a Harris Poll found that more than half of six-figure earners would not feel financially secure until their income doubled, and three-quarters used credit cards because they had recently run out of cash. (2)
In other words, you can’t get rid of bad spending habits. If you say “yes” to any of the important things listed below, you may also be on the path to financial insecurity.
Helping friends and family with their financial struggles can feel noble, but it can quickly derail your own finances. Unfortunately, it’s hard to say “no” to someone you love.
According to the Pew Research Center, nearly 6 in 10 parents admit to providing some financial assistance to their adult children. (3)
Additionally, 53% of adults said they have loaned money to a friend or family member at least once, and 48.3% would ask a family member for money without expecting it to be paid back, according to a 2025 JG Wentworth survey. (4)
Simply put, lending money to a loved one is almost the same as throwing cash into a black hole. This is not to say that you should refuse all requests for financial help. However, if you say “yes” too often, you’re putting yourself in a financially disadvantaged position.
The cost of dining out, attending concerts and vacations has increased rapidly in recent years. According to CNET (5), U.S. adults currently spend $2,841 per year on restaurants and takeout, while the average household entertainment budget is $3,636 per year, according to Ramsey Solutions. (6) Add in occasional expenses like birthdays and anniversaries, and you can see why an active social life is an expensive luxury.
You don’t need to give up all social opportunities and live like a hermit, but saying “no” occasionally can help you build meaningful savings over time.
Higher-income individuals have greater access to credit, and many of them take full advantage of this.
According to a 2025 PYMNTS survey, higher-income shoppers are 40% more likely than lower-income shoppers to rely on buy now, pay later programs. (7) And, according to BHG, 62% of individuals making more than $300,000 a year are struggling with credit card debt. (8)
If you fall into this group, resist the temptation to maximize all the credit available to you. Even a high six-figure salary can be depleted quickly by accruing interest multiple times a month.
Read more: This is the portfolio shift many wealthy investors are quietly making in 2026. Should you consider this too?
According to Capital One, consumers spend an average of $282 per month on impulse purchases. (9)
Most impulse purchases are relatively small items such as shoes, gadgets or accessories. If you make a large impulse purchase, that’s a red flag.
Buying new appliances or renovating your kitchen on a whim might not seem like a big deal, but it can have a profound impact on your financial future.
A practical way to limit impulse spending is to set a personal spending cap. For example, you can force a 7-day pause before proceeding with any purchase over $1,000.
During that week, you can research prices, compare alternatives, and confirm that you actually need the items you plan to buy.
Buying a home, especially if it’s your first home, is an emotionally charged decision. With emotions running high, it’s easy to buy a home that’s over your budget.
Nearly three-quarters of first-time homebuyers and 65% of homebuyers overall have some regrets about their purchases, according to Clever Real Estate. (10)
According to the St. Louis-based real estate technology company, more than half of first-time homebuyers feel financially stretched beyond expectations, while 38% of overall homebuyers say they exceeded their initial homebuying budget.
Housing costs are often the largest item in the typical household budget, and overspending can have long-term consequences for your financial security. Avoid regret by adhering to a strict budget and some financial guardrails.
For example, you could limit your home search to properties with less than four times your annual income and properties with monthly payments of less than one-third of your monthly salary.
Buying a home you can easily afford could completely change your financial future.
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Ugoff (1); Harris Poll (2); Pew Research Center (3); JG Wentworth (4); TechNet (5); Ramsey Solutions (6); Pimmitz (7); BHG Financial (8); Capital One (9); PR Newswire (10).
This article provides information only and should not be considered advice. It is provided without any warranty of any kind.
