Ask any financial advisor which question they get the most, and they’ll probably tell you it’s this: “How can I get rich quick?” Most of the time, the answer is simpler than you’d imagine: save more. This can mean spending less, investing wisely, or both.
Unfortunately, far too many people do the exact opposite. They invest with emotion, they spend way too much , they have barely any savings, and they continue to live in a state of ignorant bliss regarding their finances. They have a terrible relationship with money.
The first step is to improving your situation is to take a good look at your finances, both at what’s coming in and what’s going out. Add up your earnings, then subtract your expenses over a span of three months. If the number you get is positive, you’re earning more than you spend. Good for you! However, if you’re like most people, the number is negative, meaning you spend more than you make.
Luckily, even if you’re spending more than you’re earning, you can improve your habits! Here are three incredibly common money problems and how you can fix them.
1. You Can’t Get Out of Debt
You’re not alone in your debt; a lot of Americans are drowning in it. The next time you get a bill in the mail, read the fine print. The credit card company is legally required to tell you how long it will take to completely pay off the bill if you only make minimum payments. Since interest rates are usually around 16%, it’s going to take a long, long time to pay off the balance. Once you have a realistic view of the amount of money you’ll spend by only paying these minimum payments, dedicate yourself to throwing everything you can at this beast. You’ll never be able to get rich until you eliminate your debt.
2. Spending Money Makes You Happy
You need to tackle your emotional spending habit. Yes, spending money often feels good, but that high is just temporary. When you mix money and emotions, nothing good can come of it. Never go shopping if you’re trying to lift your spirits. It will be much more to save and increase your wealth over the long-run. Get used to recognizing when you’re about to spend money just for an emotional release. Come up with other activities to do instead, like cooking, reading, or going for a walk. Whatever you do, don’t head to your favorite shopping center!
3. Too Much Spending Deprivation
Just like dieting and depriving yourself of your favorite foods, you’ll start to feel uneasy and unhappy if you’re frugal 100% of the time. Yes, you can be money savvy, but you don’t have to deprive yourself of everything all the time. To make sure this boredom doesn’t set in, add a spending limit to your budget. You’ll factor in fun spending smartly, allowing you to do the things you love without blowing your savings plan.
(Bonus) Find a Money Mentor
Find people in your life that inspire you to do better with money. Read about Wes Edens, Warren Buffet, and other successful investors to learn about how they handle their finances. Emulating their successful habits could lead you towards financial independence. Remember to keep in mind that not everything is always what it appears to be. Many wealthy people appear to be broke, while many broke people put off the appearance of being wealthy.
Learning to conquer these money mistakes can set you on the path to wealth and riches. Always remember that you are not alone in your debt journey, but you are the only one who can fix it. Good luck, and we wish you a prosperous future!