Discover the seven habits that can keep you poor, ranging from not having a budget to buying new cars and more. See what's helping people avoid these money habits that can make you poor with greater ease and how you can benefit from those same advantages. 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 poor habits to avoid.
1Not 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 cups of coffee before work or snacks at the gas station. These small expenses can add up.
2Carrying 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.
3Not Setting Up An IRA
Time truly is money. Get your IRA set up as soon as possible. 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.
4Not Saving Money
If you pay everyone else first every month, there never seems to be anything left over to save. Pay yourself first. Then, pay your bills with what's left.
Many employers can have earnings automatically deducted from your paycheck. They can put it in a separate account. Save some money every month.
5Buying New Cars
A new car loses an enormous amount of value in a very short period. Look into certified used cars. Select those 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. Some of these have minimal wear and tear. These cars usually have warranties, too.
6Losing Control Of The Small Stuff
Take a close, honest look at how much the small stuff is hurting your bottom line. How much are you spending on fancy coffee, lunch, snacks, magazines, sodas? Look at your bank statement to see what's going on.
Small leaks can sink ships. Fix your leaks. Do this before they get out of hand.
7Ignoring 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% to 5%, so think about how much that is. 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 money situation. Consider which habits are having a negative impact on your life. 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.