Our paycheck defines whether we’re rich or poor, right? In reality, true wealth comes less from a pay check and more from your behaviors.
Each financial decision you make or habit you sustain has an impact on your finances, and you’ll be surprised to discover all the financial behaviors that are keeping you poor.
#1 Spending More Than You Earn
One in five Americans spend more money than they earn. Are you one of them? It’s easy to get overwhelmed by bills and rent, but the extra spending usually comes from spur of the moment purchases, like fast food, when you decide what you want now is more important than your future financial stability.
#2 Not Building a Savings Account
When you get your paycheck you more than likely start right away on the bills and expenses. However, by paying yourself each month, simply 10% of your income, you can build up a sizeable nest egg in no time that will give you peace of mind for a rainy day.
#3 Being Too Generous
We all want to treat our friends and family every once in a while to make us look good. However, if you’re constantly paying for dinner or buying the next round, that debt is going to catch up to you. If you’re really in a pinch, allow others to pitch in instead of spending money you don’t have.
#4 Using Credit Cards Like Cash
Credit is not free money. The average American has over $15,000 in credit card debt, and that’s just the average. By changing your mindset about credit cards and thinking of them more as a debit card that needs to be repaid, you can avoid racking up a total.
#5 Overdrawing From Your Account
The easiest and fastest way to lose money is through unnecessary fees. Over drafting is an automatic $35 fee of hard earned money. Always be aware of your account balance and never try to take out more money than you have.
#6 Not Planning Ahead
Most of us are on top of our monthly expenses. That’s what our monthly paychecks are for. However, other expenses come quarterly or annually that we need to be prepared for. By putting a little money away each month you won’t be caught surprised and empty handed when the payments are due.
#7 Ignoring Debts
When you’re broke, sometimes it’s nice just to curl up under a blanket and hide from those big red numbers. Unfortunately, all debt accumulates interest, and all interest is simply money down the drain. Ignoring debts doesn’t make them go away, it allows a bad situation to get worse.
#8 You Have No Emergency Fund
Emergencies happen, and they always come at the most inopportune moments. Put a few dollars away each month until you have a solid $1,000 set aside specifically for emergencies or unexpected expenses.
#9 Spending Too Much on Housing
Maybe it’s time to consider moving to a smaller place. To be financially responsible, you shouldn’t be spending more than a third of your paycheck on housing. If you’re spending more than that, you’re only setting yourself up for failure
#10 Not Making Adjustments
Maybe you have a routine where you buy donuts every Saturday, or you make large car payments because you’ve always had a nice car. However, when things aren’t working out financially it will take adjustments, such as getting a smaller car, going without donuts, or buying cheaper brands at the grocery store.
#11 You Don’t Budget
If you don’t know exactly where your money is going then you’re losing it. By creating a budget you can track your expenses and move any excess money to the areas of your finances that need it most, like debt.
#12 You Believe Wants are Needs
Wants are not needs. Needs are food, clothing, and shelter. Wants are fast
food, high-end brands, and a big house. You can want those cupcakes all you want, but you don’t need them. If you can’t differentiate between wants and needs, you’re losing more money than you know.
#13 Lack of Money Management Skills
If you don’t know how to manage your money, you’re destined to spend more than you should. Research classes, workshops, or websites that will teach you skills and knowledge to manage your money in ways you’ve never considered before.
#14 You Settled for a Job
How many times have you complained about your paycheck? Have you ever asked for a raise? Have you ever looked for a different job, or considered getting training or education in a different field of work? Don’t get stuck unable to make ends meet. Try to increase your income any way you can.
#15 You Want to Get Rich Quick
Not going to happen. People waste thousands of dollars on Get Rich Quick schemes and they never come out on top. The key to wealth is a wise use of time, so stop throwing your hard earned money at sketchy opportunities.
#16 You Want It All
People want everything too soon. However, once you’ve left your parents and are out on your own, you can’t realistically afford a nice car, a house, or expensive holidays in Hawaii. By saving your paychecks for large purchases one at a time, you’ll be able to achieve your goals in a more practical and financially responsible way.
#17 Not Investing Properly
Buying a fancy house or boat is not investing. Properly investing means putting your money toward yourself in things like your career, education, or savings. All of these will benefit you in the future.
#18 You’re Unwilling to Sacrifice
If you can’t sacrifice, you’ll never get on top of your finances. Going without or “making do” are essential to getting yourself financial security and to a point where you can afford more luxury in life.
Feeling a little guilty? It’s not too late to make some changes. They say the best time to start something was a year ago, and the next best time is now. By living more responsibly and following some of these steps, you can be sure to have a more secure financial future.