Money Habits That Keep You Poor – 9 Things To Watch Out For
Here are 9 things to watch out for as they have a tendency to keep you poor and stop you from attaining wealth.
Just as there are habits that will make you rich, there are others that will make you poor.
Habits aren’t always easy to break, but when you see the damage caused by these common practices, you’ll be motivated to get them out of your life!
Here are seven common money habits that can prevent positive progress:
MONEY HABITS THAT KEEP YOU POOR
HABIT 1 – Not having a budget.
Everyone needs a budget, even if they’re making a million dollars a year.
Spending money is easy, no matter how much you have.
If you don’t set some parameters, things can get out of control in a hurry.
- Sit down with all your monthly bills and set up a simple budget.
- Keep the little stuff in mind, too, like coffees before work or snacks at the gas station. Those small expenses can really add up.
- Note: Budgeting isn’t about limiting yourself – it’s about making the things that excite you possible.
- Budgeting is the first step toward financial freedom.
- The best way to stick to your budget is to start one.
- Remember it’s not about how much money you make. It’s how you save it.
Beware of little expenses; a small leak will sink a great shop. Benjamin Franklin
MONEY HABITS THAT KEEP YOU POOR
HABIT2 – Carrying credit card balances.
No one can consistently invest well enough to offset credit card interest.
Take a look at your last statement to see just how much your credit card is costing you.
Depending on your interest rate and balance, it can easily be thousands of dollars a year.
MONEY HABITS THAT KEEP YOU POOR
HABIT 3 – Not setting up an IRA.
Time truly is money.
Get your IRA set up as soon as possible and put some money in it.
The funds you’ll have at retirement are heavily dependent on when you get started.
And IRAs are wonderful retirement tools.
Fund yours as fully as you can each year and watch your retirement grow.
MONEY HABITS THAT KEEP YOU POOR
HABIT4 – Not saving.
If you pay everyone else first every month, there never seems to be anything left over to save.
Pay yourself first, and then pay your bills with what’s left.
Many employers can have earnings automatically deducted from your paycheck and put into a separate account.
Save some money every month.
If you save money, money will save you.
A simple fact that is hard to learn is that the time to save money is when you have some. Joe Moore
Saving a small amount soon builds up to a large amount. Scottish Proverb
Do not save what is left after spending but spend what is left after saving. Warren Buffet
Too many people spend money they haven’t earned, to buy things they don’t want, to impress people they don’t like.
If you would be wealthy, think of saving as well as getting. Benjamin Franklin
You must learn to save first and spend afterwards. John Poole
MONEY HABITS THAT KEEP YOU POOR
HABIT 5 – Buying new cars.
A new car loses an enormous amount of value in a very short period of time.
Look into certified used cars that are only a couple of years old.
Frequently, you’ll be able to find a car at half the cost of a new one, with minimal wear and tear.
These cars usually have warranties, too.
Brand new cars lose a good portion of their value instantly.
Even millionaires often drive reliable used cars.
After all a new car loses 70% of its value in the first four years of ownership.
MONEY HABITS THAT KEEP YOU POOR
HABIT6 – Letting the small stuff get out control.
Take a close, honest look at how much the small stuff is hurting your bottom line.
How much are you spending on fancy coffee in the morning?
Do you go out to lunch every day?
How about snacks?
Magazines?
A soda at the convenience store?
Look at your bank statement to see what’s really going on.
- Remember small leaks can sink ships. Fix your leaks before they get out of hand.
- If you buy things you don’t need, soon you will have to sell the things you need.
Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is more productive than energy devoted to patching leaks. Warren Buffet
Rule 1: never lose money. Rule 2: never forget rule 1. Warren Buffet
MONEY HABITS THAT KEEP YOU POOR
HABIT 7 – Not taking advantage of your employer’s matching contributions.
If your employer will match you 401k contributions, you’re leaving a lot of money on the table.
Many employers will match 3-5%.
Think about how much that really is, and then consider the effect of compounding interest.
Over time, the money they give you becomes worth a lot!
- Employer contributions should be viewed as free money, because that’s exactly what they are.
- Would you pass on money that someone handed you on the street, with no strings attached?
As you read through the list above, think about your own money situation.
Consider which habits are having a negative impact in your life and resolve to eliminate them immediately.
Accumulating wealth can take time, so it’s important to start as soon as you can.
Fight these bad habits with everything you’ve got, and watch your monetary success grow year after year.
It’s time to put an end to bad money habits.
No matter how much you make, you can’t out-earn your mistakes.
Don’t tell me where your priorities are. Show me where you spend your money and I’ll tell you what they are. James W. Frick
You’ll never out-earn your bad spending habits and stupidity. You have to change your habits and get smart with your money. Mary Hunt
It’s not your salary that makes you rich; it’s your spending habits. Charles A. Jaffe
The habit of saving is itself an education; it fosters every virtue, teaches self-denial, cultivates the sense of order, trains to forethought and so broadens the mind. T.T. Munger
Saving must become a priority. Not just a thought. Pay yourself first. Dave Ramsey
If you enjoyed this post, please feel free to share it!
As a seasoned financial advisor with years of experience helping individuals improve their financial situations, I can attest to the importance of cultivating good money habits and avoiding common pitfalls that can keep you from building wealth. Let's break down the concepts mentioned in the article "Money Habits That Keep You Poor – 9 Things To Watch Out For" to provide a comprehensive understanding:
-
Budgeting: Establishing a budget is crucial regardless of your income level. It helps you track your expenses, prioritize spending, and allocate funds for savings and investments. Budgeting isn't about restriction; it's about empowering yourself to achieve your financial goals.
-
Credit Card Balances: Carrying balances on credit cards can lead to substantial interest payments, eating into your finances. It's essential to pay off credit card debt promptly to avoid accumulating high-interest charges.
-
Individual Retirement Account (IRA): Setting up an IRA early allows you to take advantage of compounding returns, maximizing your retirement savings over time. The sooner you start contributing to an IRA, the more significant the impact on your long-term financial security.
-
Saving: Prioritizing savings ensures that you build a financial cushion for emergencies and future goals. Paying yourself first before other expenses reinforces a disciplined approach to managing money.
-
Buying Used Cars: Purchasing certified used cars instead of new ones can save significant money due to depreciation. Used cars offer value and often come with warranties, providing reliable transportation without the hefty price tag of brand-new vehicles.
-
Controlling Small Expenses: Overlooking small, recurring expenses can add up and hinder your financial progress. Monitoring discretionary spending on items like daily coffees or dining out helps plug financial leaks and redirect funds towards savings or investments.
-
Employer Matching Contributions: Taking advantage of employer-matched contributions to retirement accounts is essentially free money. Maximize these contributions to leverage the power of compounding and accelerate wealth accumulation.
By recognizing and addressing these money habits, individuals can pave the way for financial stability and long-term prosperity. It's not just about how much you earn; it's about how you manage and allocate your resources wisely to secure your financial future.
