#1 : Spending more than you make
The truth is, the only way to accumulate wealth is to live on less than you make.
This seems pretty obvious, right? But we work with clients who are spending more than they make all of the time; going into debt instead of building their net worth.
For many this is easier said than done. Lifestyle creep, expectations of what we “should” have – even if we can’t afford it. Don’t give in to the noise. Live on less than you make and use the balance to pay down debt and save money.
#2: Refusing to budget
There is a common misconception that making a budget is about limiting how much fun you can have and only focuses on what you cannot do. If this has been your outlook, try to shift your mindset and think of a budget as an opportunity to prioritize what’s most important to you.
Once you shift this mindset, budgeting suddenly becomes empowering! You are in control of your money, not the other way around.
Learn more about budgeting, here.
#3: Giving into the microwave lifestyle
So much of our world revolves around instant gratification. From 2-Day delivery to virtual everything – it can be difficult to see a reason to wait for anything.
But the old adage that anything worth having is worth waiting for – still rings true! Especially when it comes to long term goals. So try to focus on improving your capacity to delay gratification by having a vision for your future. Whenever you are considering a purchase or making a financial decision, ask yourself – does this align with my bigger goals and vision for my life?
#4: Saving “whatever is left”
One way to guarantee that you never reach a savings goal, is to take this approach. This way of saving money only leaves you with crumbs and that’s not fair to you!
Instead, Pay Yourself First! Set up an automatic transfer straight from your employer (splitting your paycheck) or your personal checking account to a separate savings account. This way, you consistently make progress towards your savings goals and makes it far easier to live on less than you make.
Learn more about choosing a savings account, here.
#5 Choosing credit over cash
Despite how many articles you read that cash is on it’s way out, it absolutely is not, nor should you want it to be. Many studies have shown that people are willing to pay up to 60% more when paying with a card rather than cash, for the same item.
Instead of using credit for most of your transactions, use cash for small, day to day purchases. Cash is tangible and finite, making it far easier to stick to your spending plan rather than a card, app or digital wallet where your money is more conceptual and it is easier to spend more than you should.
Learn more about using cash, here.
Guilty of a few of these mistakes? No one’s perfect. What matters now is taking this information and applying our suggestions to make positive change. You’ve got this!