In this post, I would like to share with you 5 bad money habits that will prevent you from becoming wealthy.
1. Spending More Than You Make
This sounds like such a basic and obvious reason but you would be surprised how many people spend more than they make each month and just go into overdraft without thinking about it twice. Probably the most important personal finance concept of all is to spend less than you make. That way you can save money for a rainy day and/or use the extra money to invest.
2. Trying To Keep Up With The Joneses, Or Worse, The Kardashians
Trying to keep up with the Joneses is a major hindrance to your wealth creation. If you feel the social pressure to ‘compete’ with your neighbours, colleagues or friends when it comes to having a nice car, watch or bigger house then you are directly preventing yourself from becoming wealthy as you are spending money on things you not only don’t need but also don’t really want. Even worse than keeping up with the Joneses is trying to keep up with the Kardashians. By that, I mean purchasing luxury goods to because your favourite athletes or celebrities endorse them. Something I see happening a lot amongst the younger generation’s spending habits.
3. Investing In Things You Don’t Understand
If you have made the plunge into the investment world then you are on the right path to building your wealth. Having said that, please make sure you only invest in financial products or assets that you understand. Don’t let yourself be wooed by a fancy sales presentation and end up investing in something you know nothing about, like for example cases of vintage wine or art. If that is not your area of expertise, then stay away!
4. Not Having Financial Goals
If you want to build wealth it’s important that you have financial goals. A great example would be ‘I aim to save X-amount in the next 12 months”. In fact, most online banking platforms let you set up savings goals to help you with that. Another example of a good financial goal would be ‘I aim to pay of X-amount of debt by the end of the year’. Having financial goals, and a plan as to how to achieve them, are key when you want to create wealth.
5. Not Educating Yourself About Money
If you want to build wealth for yourself and your family but you do not understand basic financial concepts and terminology then it will be near impossible to do so. You don’t have to be an Austrian Economist to understand that without education you will not get far. Nowadays, through the help of financial blogs and book you can easily educate yourself on personal finance and investing, and the fact that you are reading this now shows you are already doing so. So, congratulations!
