(TNO) Have you ever wondered where most of your hard-earned money goes, or why despite having a decent income, the balance in your bank account each month is not much? The 8 most common money-spending habits that make many people, despite their decent income, poor below can give you an answer, according to the website Life Hack.
 Having many habits that make you poor despite your decent income – Photo: Shutterstock |
1. Spending more when income increases
There’s nothing wrong with raising your own living standards when you can. However, if you’re someone who always spends more when your income increases, or even spends more money even when your salary doesn’t go up, you’ll find it difficult to save money. Always try to keep your expenses stable, even if your income goes up, is one of the ways to get rich from spending.
2. Focusing on the present, “neglecting” the future
Usually, people tend to focus more on current needs and think they can meet future needs in the future. To avoid this not-so-positive habit, you should consider long-term plans and the future in every financial plan. Pay attention to the present, but don’t forget to save for the future.
3. Thinking it’s too early to start saving
When you’re young, you find so many things that money can buy, and you come up with countless reasons to spend money. Many people think “right now” is too early to start saving, investing. Financial experts believe that everyone should save before spending, that is, set aside a portion of your income for savings first, and then spend the rest comfortably.
4. Not recording expenses
Most people think they know where the money came from and what they used it for. But not everyone realizes that small expenses often deplete their wallets more than large ones. Keeping a record of your income and expenses, no matter how small, is a great idea for controlling your financial situation.
5. Not setting a budget
You can record everything you buy, but don’t forget to start with a budget. Having a realistic and specific budget is the foundation for personal financial planning. In addition, always spending within the planned budget will help you avoid unnecessary expenses.
6. Unclear about desires, needs, and personal financial capabilities
To save and get rich, it is essential that you value what items, products you need to have, items you can have, items you can not have, and items you do not need. Prioritize your financial goals. For example, if getting rich is your top priority, you may have to give up some current pleasures, whether you want to or not.
7. Neglecting debts
Interest rates can eat away at your financial cake considerably. Many people find it difficult to break free from this vicious cycle and as a result, they save very little or almost no savings. To break free from this situation, you can try to make a specific plan for expenses and debt repayment, and strictly follow it.
8. Constantly buying new technology devices
There’s nothing wrong with shopping for tech gadgets and utilities that you truly need. However, running after technology devices, buying a new smartphone just because it’s the latest version on the market, can harm you more than benefit you.
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Frequently asked questions
There are several habits and mindset blocks that can keep people from achieving financial stability, even with a good income. These include impulsive spending, a lack of financial literacy, not prioritizing savings, falling for get-rich-quick schemes, and more.
Impulsive spending is a major hurdle to financial stability. It often leads to unnecessary purchases, overspending, and a lack of control over one’s finances. This habit can quickly eat into savings and prevent people from achieving their financial goals.
Financial literacy is crucial to making informed decisions about money. It involves understanding basic financial concepts, managing debt, investing wisely, and budgeting effectively. Budgeting helps individuals allocate their income across expenses, savings, and investments, ensuring they live within their means and work towards their financial goals.
Saving money is essential for building financial security and achieving long-term goals. It provides a safety net for unexpected expenses, helps with large purchases, and enables individuals to invest and grow their wealth. Prioritizing savings involves setting clear financial goals, automating savings through direct deposits or investments, and reducing unnecessary expenses.
Get-rich-quick schemes are often scams or highly risky ventures that promise unrealistic returns. They rarely deliver on their promises and can result in significant financial losses. It’s important to be cautious and focus on proven, sustainable strategies for building wealth, such as investing in diverse assets, starting a business, or increasing one’s income through skill development.
A person’s mindset plays a crucial role in their financial success. A growth mindset, characterized by a belief in one’s ability to learn and improve, is associated with financial stability. Individuals with this mindset are more likely to take calculated risks, seek financial education, and adapt to changing economic circumstances.
Improving financial literacy can be done through reading personal finance books, taking online courses, or seeking guidance from financial advisors. Additionally, individuals can practice money management skills by tracking expenses, creating a budget, and sticking to it. They can also explore investing in stocks, bonds, or mutual funds to grow their wealth over time.
