Hoping to some day join the seven-figure club? Maybe you’re on your way. Many people, though, struggle financially, living paycheck to paycheck. How do you bust through bad habits and begin working skyward with your money? Get to know these five places where bad habits have held otherwise successful people back. Correcting these won’t guarantee that you’ll become a millionaire, but knocking down these barriers will help you grow your net worth faster.
[See: 8 Big Budgeting Blunders — and How to Fix Them.]
1. You prioritize short-term “wants” over long-term “needs.” Many poor people struggle with budgets. They work hard to earn a paycheck on Friday, and by Saturday, it’s gone, often spent at restaurants, on hobbies and on other short-term gratification. While your budget can’t be so tight that you binge later in revolt, a great budget starts with asking yourself this: What do I need and what do I want? The millionaire mindset means focusing on major purchases: big family trips, a cottage or even financial independence. Kick impulse spending — like expensive coffees or dinners and drinks out on the town every night — to the curb.
2. You don’t automate. What if you could focus all of your energy on building the skills it takes to grow your income and then automate the steps to capture your money as it comes in? Isn’t this better than deciding what to do with every dollar as you earn it? Of course it is. We’re nearly all better at making decisions when we sit and strategize. For most of us, building a plan is far better than winging it. So if you automate, you only have to make a great savings decision once, and then automation replicates that decision over and over. Non-millionaires too often worry about being diligent when systems are the real key to success. Here’s a great place to start: Stop making direct deposits into your checking account. Instead, direct funds to a savings account and only remove the dollars you need to spend into checking. That way, money will automatically begin piling up in savings.
[See: 10 Ways to Build a $1 Million Nest Egg.]
3. You worry about the wrong risks. Risk is an important metric when it comes to investing, but many of us don’t realize that it’s also important when focusing on your budget. Bad spending habits are incredibly risky when it comes to your bottom line. Why is it that many people struggle to take risks with their investments but have no problem heading to a casino? Wealthy people understand that the stock market and real estate are two important ways to beat inflation. They also realize that frivolous spending is risky for the big picture. More importantly, you can attack both investment risk and budget risk through knowledge, which leads us to the next point.
4. You have no coach. There is a huge divide between wealthy people and non-wealthy people when it comes to coaching. Wealthy people largely welcome coaches and consultants. They look for information and coaching in many facets of their lives. People on their way to becoming millionaires don’t always have the funds to engage experts one-on-one, but they still find help by reading books or magazine articles, listening to podcasts and studying successful people. They have a knack for finding information about a topic and becoming enough of an expert to ensure that money stays in their pocket. Don’t waste time and energy watching lots and lots of television when you could use these same hours to find successful habits. Ironically, many people focus on reality television, with shows centered on other (wealthy) people having loads of fun, instead of having that fun themselves.
[See: 10 Foolproof Ways to Reach Your Money Goals.]
5. You have too much debt. While millionaires use debt, there’s a big difference in the mindset around debt with millionaires and with people who struggle to save. For spenders, debt runs their lives. They buy fun today on credit and then pay for it — plus lots of interest — tomorrow. Sure, sometimes wealthy individuals use debt, but largely as a leveraging weapon. A wealthy mindset means only spending money on “fun” if it comes out of your pocket. No credit card regrets later. Wealthy people will sometimes use debt on appreciating assets to reach goals faster. Non-wealthy people fall into the trap of thinking debt isn’t dangerous because they see wealthy people use debt instruments in strategic ways. Successful people learn to use a cash lifestyle first, then introduce debt instruments later, once they’re on sound footing.
These definitely aren’t all the secrets to becoming a millionaire, but by correcting these five bad money habits, you’ll knock down the walls to build wealth more quickly. Often the key to anything, including becoming a millionaire, is found in conscious habit-building. Find a coach and start automating today and you’re on your way.
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5 Bad Money Habits Preventing You From Becoming a Millionaire originally appeared on usnews.com
