5 Money Habits to Avoid From the Author of ‘Break Your Budget'

Avoid these money habits to build wealth and savings

Michela Allocca, a former financial analyst, author, and personal finance consultant, has shared five crucial money habits she avoids to maintain her financial health. The author of “Break Your Budget” accumulated a net worth of more than $500,000 by age 28, according to CNBC Make It. Allocca left her corporate job to pursue a career in personal finance consultancy. On her TikTok handle, she recently shared five practical tips on growing wealth and how to avoid corrosive money habits. 

1. Shopping during sales

According to Alloca, while a sale is viewed as an opportunity to save money, it often becomes an excuse to splurge on things that are not needed. She says these campaigns are created to generate a feeling of FOMO to push people into purchasing more. “Buying something you don’t need for 50% off is still spending money you weren’t planning to spend in the first place,” she says in the TikTok video. Thus, she recommends being mindful and avoiding unnecessary spending during sales.

2. Impulsive shopping

In the world of social media and online purchasing, it is easy to make regrettable purchases. Allocca says that she tries to avoid impulse shopping by adding an item she wants to buy to a list on her phone, to create a space between “an immediate urge and desire to buy something.” She recommends giving four or five days to consider the purchase as a rule to be sure of the worthiness of it. “We as a culture are very uncomfortable denying ourselves what we all like to call ‘little treats,’ but everything can’t be a little treat,” she says.

3. Traditional savings accounts

Allocca recommends avoiding a traditional savings account and opting for a high-yield savings account instead. These accounts are typically offered by large banks and they provide better annual interest rates. As per Bankrate’s data, high-yield savings accounts may offer APYs of around 5% while traditional accounts offer interest rates of about 0.6%. Allocca says all of her cash savings are in a high-yield savings account and those who aren’t using one should make a note to open one in 2024.

4. Don't avoid investing

People often skip investing money in their 20s when retirement seems far off. Some may cite not having enough information to put off investing for a later time. However, today the excuse of lack of information is no longer valid, according to Allocca. She further adds that setting up a new investment account is fairly easy, whether it’s opening a 401(k) retirement account through the employer or signing up for a brokerage account to invest in index funds. Thus, she says it is important to start investing as soon as people can even if it is only $50 a month.

5. A debit card

Allocca says that she uses a credit card for almost all of her purchases instead of using a debit card. By doing so, she collects rewards points which can be later used for things like flights or hotels. However, she also cautioned people about the high interest rates of credit cards which can lead to an increasing debt burden. She says she pays off the balance on her cards every two weeks and doesn’t buy anything that she can’t pay off in that time.