Have you ever wondered why some people, with the right opportunity to start with, never achieve anything in life? While others who didn’t have that same opportunity, and yet become very successful and rich?
Well, a lot of it has to do with money habits. People with good money habits tend to succeed in life, because they have financial goals and plan on achieving them.
And people with bad money habits tend to fail in life. It’s just that simple.
Take for example someone who wants to get out of debt, and yet splurges on expensive dinners every night just to impress friends. It’s unlikely that person will get out of debt.
You may already know the habits of the rich, but do you know that these bad money habits can drain your finances?
The 5 money habits you should quit now if you’re tired of being broke are: 1) you buy things on impulse; 2) you’re racking up too much credit card debt; 3) you fail to have an emergency fund in case of an emergency; 4) you have little or no budget; 5) you’re too generous.
If you’re committing any of these toxic money habits and don’t know how to get out of it, do not worry. We have a few tips to help get you back on track.
If you find that you have trouble saving money or spending, it may make sense to speak with a financial advisor.
- 8 Reasons You Will Never Be a Self Made Millionaire
- 6 Factors Determine Who Gets to Be a Millionaire
- 5 of the 7 Dave Ramsey Baby Steps You’ll Never Regret in Life
5 common toxic money habits to give up if you ever want to be rich.
1. Racking up credit card debt.
Avoid credit cards….just forget about them.”-Warren Buffett
Credit cards are convenient, but if you don’t use them responsibly, you may find yourself in a lot of financial trouble.
If your debt is getting out of hand, it’s important to act quickly. Here’s what you should do:
a) You need to get a FREE credit report from Credit Sesame.
Your free credit report will tell you exactly how much you owe. Once you know how much you owe, start paying down the credit card with the highest interest rate. Once you it’s paid in full, tackle the next one, and so on.
Click here to use Credit Sesame for free to see what’s in your credit report.
b) consolidate your credit card debt.
If you’re dealing with multiple credit cards, your best option is get a personal loan through Prosper.
This make a lot of sense considering that you can get a personal loan from Upstart with a 4 to 5% APR.
When comparing that with your credit card interest rate, which is more likely between 20 to 23% APR, that’s more money you’re saving.
Click here to get a personal loan from Prosper and start saving money.
2. You buy things on impulse.
If there is one thing that can derail your financial future is buying things on impulse.
When successful people want to buy something, they sleep on it to know if they really want it, instead of acting on their emotion. They tend to buy things from a list they’ve made when they’re calm.
If your spending is out of control and cannot seem to save any money, use this personal finance app called Trim.
Trim analyses your spending, cancels unnecessary subscriptions and negotiate bills — like your cable bills — on your behalf.
Click here to use Trim for Free and start saving money.
3. You are too generous.
Have you ever noticed that some people always picking up the check? They always tend to pay for their friends’ dinner or drinks.
While it’s important to extend a helping hand to a loved one or a friend when they are in dire need, being generous all of the time can significantly hurt you financially.
4. You don’t save up for an emergency fund.
Do you know what you would do if an unpredictable situation presents itself to you, like illness, your car needs major repairs, or unemployment?
If you don’t have an emergency fund, you are more likely to use a credit card or apply for a loan to cover these unexpected events. Doing so will put you more into debt.
An emergency fund is a fund where you save money specifically to cover the cost of these urgent and unexpected expenses.
Having that money means you won’t need to borrow money if things go wrong. You should aim to have at least three to six months of living expenses in that fund.
Where to open an account for your emergency fund?
Use an online high yield savings account like CIT Bank to get a high interest on your money.
5. You don’t have a budget.
It’s very easy to lose track of your money.
A budget can help you track where your money is going every day or each month. It allows you to know what you are spending your money on.
If you don’t have control over your money, then this is the right time to do one, by using one of the best budgeting app, called Digit.
Digit analyses your bills, your income and spending habit and automatically builds a savings fund for you.
It’s really “saving without thinking.” So, if you have trouble budgeting yourself, you can build up a savings fund without any effort on your part.
Call to action: speak with a financial advisor.
You can talk to a financial advisor who can review your finances and help you reach your goals (whether it is making more money, paying off debt, investing, buying a house, planning for retirement, saving, etc). Find one who meets your needs with SmartAsset’s free financial advisor matching service. You answer a few questions and they match you with up to three financial advisors in your area. So, if you want help developing a plan to reach your financial goals, get started now.