We’re going to discuss the most common money bad habit. The last ten years of my life have been all about money and finance. I have a degree in finance, a certificate in accounting, and a job in investment banking. one of the most life-changing skills. I have learned through it all how to handle my finances, recognize my bad money habits, and break free from them. So in this blog, I’m going to share with you nine of the most common bad money habits that hold people back and tips on how to break out of them.
Paying Yourself Last
This is the most common financial bad habit that everyone develops throughout their lives. I first heard of this in the book Rich Dad, Poor Dad by Robert Kiyosaki. It’s one of the blueprints for achieving financial freedom. Robert explains that the way people pay their bills can be broken down into two types.
The first way is the Poor People’s most common money bad habit and that is through paying themselves last. so as soon as your paycheck comes in you then pay your rent your phone bill your subscriptions, find your social plans.
Then you’ll save whatever’s left over if there is even any money left to save. The second method he talks about is the rich people’s most common money bad habit and they do the complete opposite. They pay themselves first, and you should do the same; take at least $10. and put that into your savings account the minute you get paid. Treat it like paying a bill.
This is so important and by doing this you’re guaranteeing that that money will be saved and won’t just slip through your fingers through spending. A lot of people are probably thinking there is no way I can do this I live paycheck to paycheck.
But the surprising thing is when you take those 10 and put them away, your mind will think of ways to structure your spending and structure your finances to last for the whole month. You won’t even realize that you’re buying their things before you pay yourself.
Getting Comfortable With Bad Debt
Debt appears to be so common these days that people are using it to buy the smallest of items as gifts or clothes. I have a straight line unless I can afford to pay for that thing outright in cash. I shouldn’t be buying it with any form of debt. Remember, credit card companies want you to be bad with your finances because that’s how they make money from this.
The average credit card interest rate is 22. which cancels all kinds of benefits and rewards these credit card companies are providing. if you’re not able to pay them off their interest debt as soon as possible. By the way, don’t follow this requirement in your life most common money bad habit is a very bad effect on your life
Not Having a Stockpile
Number three is not having a stockpile, which ties into Point No. 1. which is about paying yourself first. Essentially, you’re saving enough to have a three- to six-month cushion behind you. This is super important, and it will give you peace of mind just by having this buffer kept to one side. and available to tap into if you need it, you free up that mental energy to dedicate to more important things. most common money bad habit
So how do you gather this six-month buffer? by compensating yourself. first, start putting that 10 away and once you have your stockpile then you can start using the additional money you save to build into your investment fund and looking at Investments. most common money bad habit
Not Knowing Your Income and Expenses
properly until you know what your starting point is. How do you know where you want to be? There’s something called “lifestyle inflation,” which means your spending will rise as your income rises. The more money you make, the more you spend, and it’s a cycle to make more money to buy a bigger house.
Financially, they know their assets, they know their liabilities, and they have a clear goal for where they want to go financially. and all the steps they need to take to get there make them more likely to get a lot of money. and build wealth compared to people who just fantasize about money. but have no idea how to go about it, how they plan to acquire it, or how to manage it. Just being mindful of their stuff and seeing those numbers in black and white will trigger you into action. You should avoid making this sort of financial error since it is the most common bad habit with money. most common money bad habit
Expensive Hobbies Most Common Money Bad Habit Explorer
Fifth is having expensive hobbies. A lot of people like to shop. I suppose part of this is due to the psychology of missing out—we’re constantly bombarded with marketing messages about where we should be in our lives.
We receive messages about what we should own, and then we receive messages about what we should wear. and where we should go on vacation to avoid those situations or cut back on those expensive hobbies. and replace them with other hobbies, and as a finance and abundance expert, I would say that if you want to spend loads of money on something, let that be on skills, experiences, or education. People can’t take that away from you; these are the things that are shaping you as a person, as well as the extra skill sets that you can use later on to earn more money, add more value, and generate wealth in the long run. most common money bad habit
Focusing Purely On Saving
Next up, we have to focus purely on saving. If you want to improve your financial position, you can first save more of your existing income. or you can make more money and create more income streams, so don’t pick the most common money bad habit. and the ideal combination is a mixture of both. most common money bad habit
You can’t build wealth if you’re making more money and spending it all. But you also can’t if you’re focusing on the saving side, because there is a cap to how much you can save, and using those cashback sites will only get you so far. So to truly build wealth you have to think of both sides of the equation both how you will save a larger percentage of your income.
However, there is a limit to how much money you can save, whereas the amount of money you can make is infinite. There is unlimited potential upside. whether it’s investing in the stock market, asking for a pay rise, or starting a side hustle. You want to break the most common money bad habit of thinking that saving money will massively increase your wealth. most common money bad habit
Paying Too Many Taxes most common money bad habit
Paying too much in taxes is going to be the single biggest expense in your life. This is the most common money bad habit. While everyone has to pay taxes, a lot of people are just wealthy because they know about illegal corporate structures that come with tax advantages. They hire tax advisors that help them minimize their tax bills.
So if you want to get one step ahead, one of the best ways to increase your wealth is by understanding tax rules in a way that stacks up in your favor. Don’t make the most common money mistakes. The most common money bad habit is investing through an ISA or a Roth IRA, which is an investment account that protects your dividends and profits from taxes.
If you’re a solar printer, you should consider operating as a company rather than an individual; the tax benefits are enormous if you do. I’ll go into these in another blog, but all of this stuff is legal. If you are someone who disagrees with this and prefers to pay more taxes regardless of whether or not you can reduce them legally, then it doesn’t hurt to understand how the tax code handles this and reduce that tax bill’s most common bad habit.
so that you can instead use the money to give back to things that directly align with your values instead of letting someone else decide where that money should be going. If you want me to make an article on tax, I was planning to do so, but I have been a bit skeptical about whether to release it; it’s a topic that can go either way, so Freedom But I’ve been debating whether to release it; it’s a touchy subject, so FreedomFreedom.
It is evil to be unconcerned about your finances.
I hear people say there are so many more important things in life than money, and yes, of course, there are. But life is also largely dictated by finances, so you might as well master this and immerse yourself in this world. where you can learn to use your finances in a way that gives you financial freedom.
The independence that you want may just be a matter of finding the right person. or the right tools to help you resonate with your finances in the way that most appeals to you, whether you’re an employee or an entrepreneur…
someone who is less daring, someone who is more of a risk-taker. But there will be someone who matches your investing style more closely. I hope you understand the 10 most common money mistakes you should avoid in your life.
Thank you so much for this article. If you enjoyed the most common money bad habit, you might like to see another one.