Better Money Habits Matter More Than Income. Here's Why
- No matter how much money you earn, you still need to make smart choices with it.
- Earning more money won't improve your overall finances if you still spend most or all of what you make—or more.
- Developing good money habits like budgeting and saving can make all the difference.
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Free up cash each month with Freedom Debt Relief
Ozzy S., Freedom client²
“Right away, I had more money each month because of program costs so much less than what I was paying on my minimums.”
If you are struggling with debt and hoping for debt relief, you may be focused on just making more money. Many people think earning a bigger paycheck will solve their financial troubles. After all, if you bring more money in, you have more money to save and spend.
In reality, though, that's not necessarily the case. Even high earners can struggle with money. That's because income is only one piece of the puzzle—your money habits can make or break your finances regardless of your paycheck.
In fact, money habits may actually matter more than income in many situations. Here's why that's the case.
Your Money Habits Determine How Much Income You Keep
While your income makes it possible to save, invest, and grow your wealth, your spending habits ultimately determine whether you actually do these things or not.
There are plenty of people who don't make a lot of money who end up wealthy. That's because they live within their means and use their money to improve their financial situation. They invest in assets that increase their net worth and eventually make them financially independent. For example, they might buy stocks or bonds that earn returns.
There are also plenty of people who make a lot of money and don't end up wealthy. This can happen if they spend most or all of what they make. In fact, some people with very high incomes still spend more than they earn.
If you make $400,000 per year, but you spend $450,000 per year on fancy restaurants, clothes, or other expenses that don't add to your wealth over the long haul, it doesn't matter that you are earning a lot. You still end up in debt.
Your money habits are ultimately what will determine if you end up with emergency savings, money in the bank, and investments that can help to make you financially independent one day.
There's No Ceiling on Lifestyle Inflation
There's also another reason why your money habits can matter more than your income. The reality is, there is no upper limit on the lifestyle changes you can make when you start earning more.
If you increase your spending every time you get a raise, it will become really hard to get ahead. For example, if you get a bonus at work and immediately go and spend it at the mall, then the bonus doesn't do anything to improve your finances over the long term—and many people do tend to spend any extra windfalls or raises that come their way.
If you don't create a budget, it's really easy to just let your costs climb along with your income. In fact, fighting this kind of lifestyle inflation can be harder than it seems because, as you start to earn more, you often come into contact with people whose salary may be even higher than your own. If you upgrade your lifestyle to keep up, then you won't break the cycle of spending.
5 Money Habits That Pay Off Credit Card Debt Faster
You Need to Commit to Using Money as a Tool
If you want to develop the kind of habits that allow you to save more money and build wealth, regardless of income, you should try to commit to using money as a tool.
This means that you should make a smart plan for how your earnings can improve your overall financial picture. For example, you may want to use your income to:
Pay off debt
Invest in assets that will grow in value over time
Of course, you are going to use your money for some fun things. Very few people save every dollar they earn with no room for spending on things they enjoy. But you should be strategic about using your money so your fun spending doesn't outpace your other financial goals.
Making a budget could help you do that. You can decide how much to spend on different expenses and get in the habit of sticking to your spending limits.
You should also get in the habit of paying off your credit cards in full every month. And once you have your debt under control, consider automating your savings and investing so you're depositing at least a little bit of money into retirement and savings accounts every month.
If you can adopt good money habits, you'll be on the path to success. Your income will affect the time it takes to get there, but you should still be on the right road to reach the destination of financial freedom eventually, as long as you stick with it.
Debt relief stats and trends
We looked at a sample of data from Freedom Debt Relief of people seeking debt relief during October 2026. The data uncovers various trends and statistics about people seeking debt help.
Credit utilization and debt relief
How are people using their credit before seeking help?
Credit utilization measures how much of a credit line is being used. For example, if you have a credit line of $10,000 and your balance is $3,000, that is a credit utilization of 30%. High credit utilization often signals financial stress.
We have looked at people who are seeking debt relief and their credit utilization. (Low credit utilization is 30% or less, medium is between 31% and 50%, high is between 51% and 75%, very high is between 76% to 100%, and over-utilized over 100%). In October 2026, people seeking debt relief had an average of 74% credit utilization.
Here are some interesting numbers:
Credit utilization for debt relief seekers
| Credit utilization bucket | Percent of debt relief seekers |
|---|---|
| Over utilized | 30% |
| Very high | 32% |
| High | 19% |
| Medium | 10% |
| Low | 9% |
The statistics refer to people who had a credit card balance greater than $0.
You don't have to have high credit utilization to look for a debt relief solution. There are a number of solutions for people, whether they have maxed out their credit cards or still have a significant part available.
Credit card debt - average debt by selected states
According to our October 2026 data, 88% of debt relief seekers had a credit card balance. The average credit card balance was $17,628. Here's a quick look at the top five states based on average credit card balance:
Avg credit card debt by state
| State | Average credit card balance | Average # of open credit card tradelines | Average credit limit | Average Credit Utilization |
|---|---|---|---|---|
| Nebraska | $16,980 | 7 | $24,102 | 80% |
| Alaska | $20,425 | 9 | $28,791 | 78% |
| Indiana | $15,046 | 9 | $27,261 | 78% |
| Oklahoma | $14,757 | 8 | $25,731 | 78% |
| Kentucky | $15,277 | 8 | $26,156 | 77% |
The statistics are based on all debt relief seekers with a credit card balance over $0.
Many borrowers are treading water or falling behind
According to a 2026 survey by Freedom Debt Relief and Money.com, of those with substantial debt, 28% can only afford to make the minimum-required payments. That figure rises to 36% among Gen Z and 34% among millennials. Another 20% are behind on at least one account.
Regain Financial Freedom
Seeking debt relief can be the first step toward financial freedom. Are you struggling with debt? Explore options for debt relief to regain control of your finances. It doesn't matter how old you are or what your FICO score or credit utilization is. Take the first step towards a brighter financial future today.
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Author Information
Written by
Ashley Maready
Ashley is an ex-museum professional turned content writer and editor. When she changed careers, she was finally able to focus on turning her financial situation around. She went from deeply in debt to homeowner in two years. Ashley has a passion for teaching others about better living through better money management.
Reviewed by
Christy Bieber
Christy Bieber has been writing about personal finance and law for 16 years. She has a JD from UCLA School of Law with a focus on business law, and a BA in English, Media & Communications from the University of Rochester, as well as a Certificate of Business Administration.