Money Habits That Can Keep You Poor
Are Your Money Habits Harmful?
I believe that our money habits can take us from ordinary to extraordinary. My passion for this topic led me to write the eBook – 9 Success Habits: Ordinary Habits that Create Extraordinary Results.
Most people believe that some individuals are just born lucky. Or they have a predisposition to succeed. But, no, that is not true. None of us are born with a rare success gene. What is true? Our success results from what we repeatedly do or do not do.
And keep this in mind – it is not only about forming positive habits. But it is avoiding poor habits, too.
“We are what we repeatedly do. Excellence, therefore, is not an act but a habit.” – Aristotle
To achieve any worthwhile goal requires consistency. And, there are no exceptions. It is as true of losing weight as it is of building wealth. Just as there are behaviors that make you rich, there are also habits that can make you poor.
Unfortunately, bad habits are not always easy to break, but when you see the damage caused by these ordinary practices, you might be motivated to get them out of your life!
Seven Money Habits That Prevent Progress
As you read the list, think about your money situation. Consider which habits are harming your finances and resolve to eliminate them immediately.
1. Not having a budget. Everyone needs a budget, even if you earn a million dollars a year. It is easy to spend money no matter how much you have. It is challenging, however, to create a plan for how and when to spend money.
- If you don’t set some parameters, things can get out of control quickly.
- So sit down with all your monthly bills and create a simple budget. Keep the little stuff in mind, too, like subscription services or DoorDash deliveries. Those small expenses can really add up.
2. Letting the small stuff get out of control. Take a close, honest look at how much the small stuff hurts your bottom line. For example, how much are you spending on fancy coffee in the morning? Do you eat out often? How about snacks? Memberships? A soda at the convenience store? These might seem trivial but look at your bank statement. You might be surprised when you see what’s going on.
- Small leaks can sink ships. Fix your leaks before they get out of hand.
3. Carrying credit card balances. No one can consistently invest well enough to offset credit card interest. Look at your last statement to see how much your credit card costs. Depending on your interest rate and balance, it can easily be thousands of dollars a year.
4. Buying new cars. A new car loses enormous value the minute you drive it off the lot. Look into certified used vehicles that are only a couple of years old. Frequently, you can find a car at half the cost of a new one, with minimal wear and tear. These cars usually have warranties, too.
No Savings & Investments
5. Not saving. If you pay everyone else first each month, there never seems to be anything left over to save. First, pay yourself, and then pay your bills with what’s left. Most employers can automatically deduct earnings from your paycheck and put them into a separate account. That’s a great way to ensure you save some money every month.
“Don’t save what’s left after spending. Spend what’s left after saving.” – Warren Buffett
6. 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 have at retirement depend heavily on when you start investing. And IRAs are excellent retirement tools. Fund yours as fully as you can each year and watch your retirement grow.
7. Not taking advantage of your employer’s matching contributions. If your employer matches your 401k contributions, you’re leaving a lot of money on the table. Many employers will match 3-5%. Think about how much that 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 they are.
- Be sure to invest as much as necessary to receive the full matching benefits.
Accumulating wealth takes time, so starting as soon as possible is essential. Avoid these bad habits like the plague, and watch your monetary success grow. Lastly, if you want help building successful money habits, contact me.
Lisa L. Baker is a professional life coach, career strategist, and keynote speaker. Lisa is the founder of Ascentim – a Maryland-based coaching practice that utilizes a unique G.R.O.W. process to help clients gain clarity, realize new possibilities, overcome obstacles, and win at life. Lisa shows high-performing professionals how to Level Up and Live the Life of Their Dreams.