Who doesn’t want financial freedom instead of stress-inducing debt or barely making ends meet each month? While it’s a desirable goal for everyone, what holds some people back? The offender is usually their spending habits, many of which they may not realize are the problem due to underlying beliefs and routines.
Often, the obstacle to reaching financial goals isn’t the lack of money but rather how current finances are managed. Perhaps we were raised with parents who didn’t have a good handle on their budgeting, ultimately passing bad habits onto us. Or maybe we developed less-than-ideal habits over time due to a lack of financial literacy.
To alter your financial trajectory, start by transforming these bad money habits that are hindering your progress. Putting an end to these habits for good and building new ones will help you start saving and moving upward in life rather than feeling stuck and poor.
1. Lack of a Savings Plan
Unless you plan on winning a lottery, getting rich is an accumulation of your wealth from the time you start making money. If you spend everything you make, there will be nothing to accumulate (obviously).
You must establish a savings plan and stick by it to grow wealth. Savings will give you room to breathe in the case of an emergency and allow opportunities to invest to compound that hard-earned money.
2. Not Having a Clear Financial Vision
Failing to create a plan to accumulate wealth means not fostering financial growth. Wealth doesn’t materialize in isolation; establishing a vision board or writing down goals for your financial goals and actively pursuing them is essential for achieving richness.
3. Not Investing in Financial Literacy
Investing in financial literacy will help you know how money works and how to invest well. Becoming rich is a skill, and most skills have to be learned.
Enroll in financial literacy classes or pick up some recommended books and learn how to invest, budget, and manage your money.
4. Keeping Bad Company
Peer pressure doesn’t just end in high school; if you keep company with people with bad money-spending habits, you will most likely be like them.
Keep the company of people with a clear vision of being wealthy, as they will keep you accountable in your pursuit of wealth.
5. Lack of Financial Emotional Intelligence
Humans are emotional beings, and these emotions also affect how we view money. However, you must separate your emotions from how you spend your money, especially if you often indulge in retail therapy.
If you buy something to make yourself feel better whenever you’re emotionally down, you’ll soon have no money left. Finding new outlets for emotions is key to disassociating your spending habits from how you’re feeling each day.
6. Falling Into Pyramid Schemes
Growing wealth is a painstaking process, and it doesn’t happen overnight (unless you inherit money from an unknown wealthy uncle.)
Falling into a get-rich scheme is the surest and fastest way to become poor quickly- it’s almost always too good to be true. Building true wealth takes time and dedication and there are no shortcuts.
7. Fear of Risk-taking
It’s good to be cautious, but it should not keep you from taking financial risks that would help you build your wealth.
When you have gained financial literacy and can gauge a good investment from a bad one, you should take calculated financial risks to help you boost your goals.
8. Failure to Diversify Your Income
With the current economic uncertainties, a single income source is a great risk. While you may enjoy your job or business security, you don’t know what the next years will look like.
If the COVID pandemic taught us anything, it’s that the world can go to a standstill in an instant. Look for more than one avenue to make money.
9. Exceeding Your Financial Capacity
One of the biggest enemies of building wealth is living above one’s means, and many young people are falling into this trap.
Keeping up with the Joneses is good for Instagram photos, but it’ll be disastrous in the long run. You do not have to get the latest phone or car model. Live within [or below] your means and save up for the future.
10. Impulsive Spending
You can’t build wealth with an “I-see-it-I-want-it” attitude. Avoid making unplanned purchases on a whim, as impulse buying can quickly deplete your resources.
Only buying what you truly need will help you stay on track with your financial goals. If you feel the urge to buy something, give it a day before doing anything impulsive and see if the desire goes away (it likely will).
11. Excessive Debt
Debt is not entirely bad when you use it to make more money, but excessive debt may be crippling in the long run.
Accumulating high-interest debt hinders wealth-building, particularly when racked up on credit cards. Focus on reducing and eliminating debt to free up financial resources.
12. Neglecting Budgeting
Without a budget, losing track of where your money goes is easy. Create and stick to a budget to manage your finances effectively.
If you don’t budget, you will always be doing a post-mortem of your finances to find out what killed your financial dreams.
20 Things Poor People Waste Money on, According to Suze Orman
If you’ve ever watched her show, you know Suze Orman pulls no punches. She’s all about calling out bad money choices, urging people to take control of their financial destinies and ditch those pesky spending habits that derail progress. While her advice can be blunt, she aims to empower folks to build wealth and protect their financial futures.
It’s important to note, Suze Orman gets flak sometimes for being too harsh. She’s not shaming people, but highlighting how certain expenses can sabotage big goals like homeownership or a comfortable retirement.
20 Things Poor People Waste Money on, According to Suze Orman
12 Culturally Acceptable Habits That Leave Americans Drowning in Debt
The average American household carries over $103,000 in debt, including mortgages, credit cards, and car loans. While there are various factors that contribute to this staggering number, there are also certain culturally acceptable habits that have played a major role in leaving America drowning in debt.
12 Culturally Acceptable Habits That Leave Americans Drowning in Debt
15 Primary Differences Between Being Wealthy and Rich (According to Dave Ramsey)
We’ve all daydreamed about hitting the jackpot and living like the 1%. But here’s the thing: True wealth is about a lot more than fancy cars and designer labels. It’s about rock-solid security and the freedom to call the shots in your life – something no lottery ticket can guarantee.
15 Primary Differences Between Being Wealthy and Rich (According to Dave Ramsey)
JayDee Vykoukal is a writer, author, mom, and Doctor of Physical Therapy. She has been writing about everything motherhood and health-related since 2018 when her first daughter was born, and she wanted to stay home. She loves to research new topics and fun facts with her kids to teach them about the world.
JayDee Vykoukal is a writer, author, mom, and Doctor of Physical Therapy. She has been writing about everything motherhood and health-related since 2018 when her first daughter was born, and she wanted to stay home. She loves to research new topics and fun facts with her kids to teach them about the world.
