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6 Money Habits That Keep You Poor (DON’T DO THIS)

Being broke sucks. Worrying about bills and living paycheck to paycheck also sucks. And the thought of that being for a lifetime is demoralizing.

Most of what we do on a daily basis is automatic.  Like washing your face or brushing your teeth.  You don’t really think about it.   And this is especially true when it comes to our money and finances.  In this video I am going to talk about 6 money habits that will keep you poor.

After graduating from college in 2006, I was left with just over $35,000 in student loans.  I made sure not to apply for any credit cards while I was in college because I alway remembered how stressed my parents seemed to be growing up when the bills came in. 

But the day that I relocated from North Carolina to Georgia my car began having problems (literally as I was relocating, I was on the side of the road).  To take care of the repair bill I opened a $1,500 line of credit (which I maxed out within the first week).  One thing led to another, next thing I noticed I was nearly $80,000 in debt.

But once I realized what I was doing, I began to replace bad money habits with good money habits and was able to pay off nearly $100,000 of debt in just a few years and finally started to save and invest my money so that I could work smarter not harder.

The hardest part of correcting a bad habit is realizing that it even exists. A lot of the time we don’t even notice it’s the little habits that are holding us back financially.  Your habits will compound over time.  That’s why it’s super important to recognize any bad money habits early on and replace them with good money habits.  

Bad Money Habit #1: Paying Yourself Last

Here’s what I mean by this, as soon as you get paid you pay your rent, Chase, Master Card, and Visa.  You go out and swipe your card and whisper a quick prayer at the register that your card doesn’t decline.  And you only plan to save IF there’s any money left at the end of the month.  (And the problem is there’s never any money left).

People who get ahead financially do the exact opposite.  They pay themselves first.  That means before they start paying their bills and swiping their cards.  They put a portion in their own pockets first.  You can do this through savings and investments.  Then they pay their bills and live on what’s left.  They prioritize making themselves richer than someone else richer.  You got to pay yourself first.  You have to treat saving and investing money like a bill.

Bad Money Habit #2- Trying to Keep Up With Social Standards

With everyone flaunting their material possessions and vacations on social media these days, it can seem like if you don’t have the latest and greatest new thing, you’re somehow less than others. That’s far from the truth!

It’s okay to tell people that you can go out right now because you are trying to accomplish some financial goals.  If they are real friends they will understand.  If not you may re-evaluate your friendship.  Trying to keep up with everyone around you, chasing experiences just so that you can post a cool photo on Instagram will leave you broke and in debt.

Think about it this way… Would you rather look rich or be rich? Stop thinking what other people think about you and your finances when they are not paying your bills.  You will never be happy about your current situation until you learn to take control of your own life and stop letting people dictate how you spend your money.

Bad Money Habit #3-  Passing Up Free Money

If your company offers a 401k match you need to start taking advantage of that, (like yesterday)! If you don’t, you’ll literally be missing out on free money.

Here’s how: Let’s say (for easy math) your salary is $100,000 and your company offers 100% matching on 5% of your salary. That means if you contribute $5,000 to your 401k in a year, your employer will also contribute $5,000. Which you would have just received an extra $5,000.

Bad Money Habit #4- You Only Rely On One Income Stream

Having one source of income can work out in your favor for a while, but what happens if you lose that job? What happens if the company fails?  And sadly about 40 millions Americans found that out during the pandemic.

Being reliant on one source can put you in a tricky financial situation if something comes up. But it can also keep you broke.

Just think – you could be earning an income while you sleep! If you build up your passive income streams big enough, you could quit your job. To spend more time building your own business, spending with your family, and chasing your own dreams.  Which I cover more in this video, I will link it below.

Bad Money Habit #5-  Not Making a Spending Plan

A Spending Plan is an outline of how much you expect to make and how much you expect to spend. This is the most basic tool you can use when it comes to managing your money. If you don’t know what you have coming in and you’re not keeping track of what’s going out, you’re essentially setting yourself up for financial disaster.

If you’ve got more going out than coming in, it means you’re overspending somewhere and you need to look for ways to cut back. Tracking your spending on a daily basis is a great way to keep up with your money and achieving your financial goals.  Zig Ziglar says it best, “If you aim at nothing you will hit it every time”.

Bad Money Habit #5- Credit Cards

The most obvious reason why people stay broke is because of too much debt.  It is hard to build wealth when every dollar you make is going through a revolving door.  Credit cards are the worst.   Credit cards make it possible for people to outspend their earnings. The bottom line is credit card debt is DUMB because of its high-interest rates and low minimum payments, and the fact that it isn’t used to buy appreciating assets.

Hopefully, these help you in your own journey and were clues into what might be holding you back financially.