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Intro

If you ever wondered why it's hard to reach your money goals, you might be stuck in one of these 10 money habits keeping you poor. Coming in with a degree in accounting and finance, I've learned a lot of useful stuff about getting better with money and avoiding big mistakes. In this guide, I'll talk about these habits that hold back your money growth and give you simple ways to fix them.

Not Paying Yourself First

Not paying yourself first. The number one rule in handling your money is to put some aside for yourself before anything else. I've learned this concept from Reading Robert Kiyosaki's Rich Dad Poor Dad. If you skip this step, it's tough to improve your financial situation.

Usually what happens is when we get paid, we immediately use the money to cover bills, and there's not much left. Start by saving for yourself first. In a nutshell, here's how you can do it: begin with 5% of your paycheck and gradually increase it to 10%, aiming for the recommended 20%. 

The more you can save from your income, the quicker you can grow your savings and improve your financial situation.

Impulsive Buying

Impulsive buying. So picture this: you're at the mall just wandering around, and suddenly you spot something you didn't know you wanted, but now you really, really want it. It's like falling for a cool new thing, and that feeling is awesome. I get it.

But here's the thing: we need to be real with ourselves. That happiness from buying something, it doesn't last. We've all said, "I deserve this," to justify a spontaneous purchase. No big deal. I've done it too, and I'm guilty as charged. But if this happens a lot, especially if it puts you in debt, it's time to pause and think things over.

Saying Yes When People Ask for Money

Saying yes when people ask for money. Ever notice how it's tough to turn down a friend who asks for money, even when you're struggling financially? We often feel obligated to help, even if it's a small amount, even if we know we might not get our money back. 

What's even harder is that the people who borrow from us might not fully understand the sacrifices we make to lend them money. Maybe we had to skip a meal or give up on a family trip to help them out. It's important to recognize the real cost when lending money that we can't really afford and learn to say no. 

The more we say no, the easier it gets, and the fewer people come asking for money. But I agree that sometimes we really can't ignore not turning down someone who really needs money for emergency purposes.

Hating on Money

Hating on money. We're in a time where it's trendy to criticize money and shame the wealthy. Hating on money is popular, and it's become a sort of competition. But let's be clear: it's not about doing what's right, it's more about trying to look good on social media.

The thing is this: social reputation doesn't pay your bills or give you the freedom you want. Money is important; it makes the world go round. Without it, you'd be constantly worried about survival like a chimpanzee stuck in survival mode. 

Don't fall into the Trap of hating on money. Instead, appreciate it, value what it lets you buy, and the freedom it brings. Money matters, and it's okay to acknowledge.

Being Okay with Bad Debt

Being okay with bad debt. The usual way of life in America involves living with a lot of debt. It's no surprise that many of us are quite comfortable with carrying so much debt. The issue with this is that the debt keeps piling up over our lifetime, eventually, we reach retirement burdened with car loans, student loans, personal loans, and credit card debt.

To break this bad money habit, commit to paying off your debt. Now take some time today to create a plan for tackling your debt. 

Avoid getting a new car loan or taking on more debt until you have it under control, and don't buy things you can't afford. Prioritize paying off your debt, and your future self will be grateful for it. Nothing boosts your cash flow more than getting rid of debt.

Keeping Up with the Joneses

Keeping up with the Joneses. We've all been there: friends or family with expensive tastes and the constant temptation to keep up with them. Maybe you envy influencers flaunting lavish lifestyles on social media. But this bad money habit hinders you from having more money after paying bills and saving.

It's the reason you might be in debt, and it can keep you poor if you're not careful. If your friends or family always want pricey dinners or trips you can't afford, it's time for a chat. Share your financial goals to save and invest; they should understand. Politely decline certain invitations or suggest more budget-friendly activities. 

If they don't respect your choices, consider finding new friends. And remember, appearances can be deceiving. What you see on social media might not reflect reality. Someone showcasing a luxurious vacation might have put it all on a credit card they can't immediately pay off.

Not Having a Safety Net

Not having a safety net. The key difference between those who struggle financially and self-made millionaires is the latter's habit of saving consistently. The earlier you start saving, the more wealth you can accumulate, whether it's for a rainy day, retirement, investment, or a big purchase.

The savings journey should begin today. After setting a budget and keeping track of your monthly expenses, it's time to regularly put money aside for an emergency fund. Saving 3 to 6 months' worth of expenses to have a safety net for unexpected bills.

Not Investing

Saving money is a good start, but if you don't invest it, you're missing the chance of growing it. Lots of self-made millionaires didn't start with tons of money; they began by saving, even when they didn't have much. 

What made them different was not just saving but also putting their money into investments like stocks or property. As time went on, the mix of saving and investing helped their money grow a lot, turning them into millionaires. 

They made themselves. So if you really want your money to grow and become wealthy, you have to try investing too. Investing in stocks, properties, government bonds, and the like can make your money grow more and keep you financially secure for the future.

Paying Too Much in Tax

Failing to plan for taxes often leads to higher tax bills. But you can change that by making a plan to pay less in taxes. Being smart about it means knowing some tricks, like if you put extra money into your retirement fund, you won't have to pay as much tax.

And if you can, having an HSA account can also help lower your tax bill. Investing in a Roth IRA is another cool trick because you don't have to give away any money you make to taxes. Talking to a tax expert is a good idea too, so they can help you find more ways to pay less tax. 

So start doing something now to understand and make the most of your tax situation. It's like keeping more money in your pocket.

Relying on a Single Income Source

Imagine if you only had one way to make money, like a job. That's like having all your eggs in one basket, which is not good as most finance experts agree.

If something happens to that job, you might have no money, and when push comes to shove, you might need to borrow just to get by. But some people have more than one way to make money, like doing a side job. 

This way, if their main job stops, they still have some money coming in. And guess what? Having more than one way to make money aside from their main job lets them save more or pay off their home loan faster. It's like having a safety net for when things don't go as planned. So having different ways to make money is a good idea to be ready for anything.