Over the past 15 years as a financial advisor, I have seen four habits that constantly trip people up financially. Many of these mistakes are avoidable. Being aware of past mistakes, looking at your current behaviors, and making changes is critical to your success. Take a look at these behaviors and see if any of these describe you:
BAD HABIT #1: Discontentment
“Content makes poor men rich; discontentment makes rich men poor.” – Benjamin Franklin
This is by far one of the worst habits. Buying more than you can afford and endless spending destroy wealth in a heartbeat. It doesn’t matter how much you make, if you spend more than you make, you’ll go broke!
- Analyze your needs versus wants
- What you think about you become! Solomon said it best: “For as he thinks in his heart, so is he.” (Proverbs 23:7)
- Are you preparing your finances to be blessed?
- God talks a lot about being faithful with small things before He will bless you with more
- Likewise, He cannot bless steps you never take
BAD HABIT #2: No Budget/ No Plan
Far too many people “wing” and “fly by the seat of their pants”. What about you? Do you have a plan or better yet are you following it?
- In Matthew 25, the master gave each servant something to manage according to their ability. Those who were faithful were rewarded with more. The servant who buried his talent in the ground was considered lazy and gave his talent to the one more obedient.
- People who lack money often fail to handle the basics (set up a budget, spend less than you make, save for a rainy day, and planning for the future).
- Look at our Federal government. You can’t spend more than you make. Our government chooses to spend more than it makes and is making up the difference with debt (borrowing from U.S. citizens and companies, and other national governments, etc.).
BAD HABIT #3: Failure to understand basic economics
Far too many people are financially illiterate. They fail to understand the stock market, basic economics, and budgeting to name a few. This leads to heartache and an empty bank account.
- What about our economy? Our economy was built on a house of cards – a mirage. With easy credit and ability to use our homes as a piggy bank. Now the debt is catching up with America. How will you get back on course?
- We will go through more economic ups and downs. How you respond to the ups and downs is most important.
BAD HABIT #4: Too much debt
This is a hard lesson learned. You can delay payments, pay interest only, refinance, etc but eventually the bills become due and will you be able to keep up? Borrowing too much will impose on your future.
- Over-consumption leads to debt (spending from credit cards, loans, etc.).
- You get deeper into debt the longer you spend more than you make. The longer you spend more than you make the more debt becomes a habit, and habits (especially lifestyle habits) are hard to break.
These four habits will surely get you off track. Do any of these habits trip you up? I’d love to hear your story…