Do you find yourself always worrying about money? Or maybe you work really hard but
you're never quite sure where your money goes? You are not alone. According to a
Pew Survey of American Family Finances, only 51% of Americans said they were financially
stable. 55% reported either breaking even or spending more than they earned each month,
while 33% said they had no savings at all. If you fall under the last category, it's likely
that you need to change your habits and attitude towards money. If you have the right mentality,
you can make your money work for you without any difficulty or stress as long as you keep
certain things in mind. That is why in this video, I will talk about some of the
poor money mindsets that could be keeping you broke, as well as solutions to overcome them.
But before we get to the list, please remember to subscribe to this channel if you haven’t.
And if you are a returning subscriber, thank you for the support. With that said, let’s go ahead!
Bad financial habits are hard to change. We do them all the time
without even realizing it. We all want to be wealthy. I mean,
who doesn’t? But it's one thing to dream about all the things you could do with a big paycheck,
and it’s quite another to muster the discipline required to make it a reality. On the other hand,
if you have poor spending habits, you will find yourself in a lot of financial trouble.
While all our financial situations differ, we all have the power to change our “broke
status.” Will it be a walk in the park? Not at all, but identifying and confronting the
poor money habits that are keeping your pockets empty can completely change your
financial life. Additionally, you have to develop a mindset that believes you
can create your ideal financial lifestyle if you want to achieve financial freedom.
So, without any further ado, let’s have a look at some of the poor money mindsets
you need to quit right now if you want to become more financially independent.
Number 1: Not knowing where your money goes
If you're living paycheck to paycheck and don't have a budget,
you probably have no idea where your money is going. The truth is that,
few Americans actually budget their income. A recent survey revealed that only 32%
of U.S. households prepare a monthly budget, which is a very low percentage.
Without a budget, you have no solid plan for managing your income, making it nearly
impossible to track your spending. However, with a budget, you have control over your money
and this makes it easy for you to prioritize your spending by allocating a portion of that
income to various categories such as groceries, savings, house and car payments and so on. It
also guides you on the financial changes to make by pointing out areas with high expenditures as
well as those that need cutbacks. As a result, it prevents you from spending money you don’t have.
A budget is a must-have tool for everyone, regardless of your income level. It can
help anyone achieve their financial goals, avoid bad debt, and save for the future. Without one,
you are digging yourself into a financial hole that might be tough to get out of in the future.
Number 2: You Believe frugality and deprivation are the same thing
Frugality is one of the most effective tools for quickly turning a bad financial
situation around. The problem is that in many people's minds,
frugality and poverty are the same thing. They believe that being careful with money
means being unhappy, deprived, and cheap, which really isn't the case.
Although there are many who take the idea of frugal living to an unhealthy extreme,
a more sensible approach would be to investigate ways to spend less money while maintaining the
same quality. It's about learning to make do with less money without sacrificing the
kind of life you want to live. It doesn't mean that you have to give up the things
you love or activities that bring you joy. It's all about creating space for the things
that interest you by reducing your spending on things that don't add real value to your life.
Let’s say you enjoy your weekly yoga sessions, but they are pricey. Being frugal does not
imply abandoning yoga entirely. It could mean looking for other areas of your life
to cut back on that don't add real value in order to afford your yoga sessions. Honestly,
there are no universal frugality rules. Use it as you see fit for your specific situation.
So, how does confusing frugality and deprivation keep you broke? The thing is,
if you're in a bad financial situation, frugality can help you get out much faster. However,
if you label it something bad, you probably won't use it as a tool. As a result, you'll
likely make no effort to improve your situation, and the cycle of financial hardship will continue.
Number 3: You want to get rich quickly
Thinking you can make quick money with little effort is a dangerous mindset to have. Making
money and building wealth does not happen overnight. It may happen quickly at times,
but usually, it's the manifestation of a long-term plan. Most people lack patience
because they want to be wealthy and successful as soon as possible. As a result, many seek the
easy way out and fall for get-rich-quick schemes that do more harm than good.
When it comes to “get rich quick schemes” gambling is one of the most common tactics that people with
a poor money mindset opt for. Renowned author Tom Corley’s five-year study on Rich habits revealed
that 52% of poor people gambled on sports at least once a week, and 77% played the lottery
every week. On the other hand, 84% of rich people did not bet on sports, and 94% did not play the
lottery at all. This is a clear demonstration of how your mindsets shape your life circumstances.
So avoid falling into this trap. You have to understand that accumulating wealth is
a process that takes a long time and does not happen overnight. Even the wealthy who did not
inherit fortune put in long hours behind the scenes to get to where they are today.
There is no shortcut to growing your bank accounts, so be prepared to put in the work.
You can do this by saving the money you would typically spend on unnecessary things, including
the lottery or sports betting. Furthermore, keep in mind that the key to achieving
financial stability is to do things slowly and steadily rather than trying to rush matters.
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Number 4: You rely on credit cards to finance your lifestyle.
When you spend everything you earn, you are obviously not saving. What’s worse, spending more
than you earn drives you into debt simply because you want to maintain your standard of living. As
a result, you resort to using a credit card to meet your monthly expenses. When you do this,
you are basically borrowing money from your future income to fund your current lifestyle.
Don’t get me wrong, there is nothing bad with using credit cards. They can be useful
for establishing credit, making emergency purchases, and even earning travel points
or cashback. However, a great deal of people, use it to purchase expensive items which they
do not have the funds for. This horrible habit makes your credit card debt grow,
especially when you have a lot of cards with high-interest rates.
So how do you deal with this? This takes us back to the first point, where I talked about
budgeting. You should ensure that you keep track of everything you spend. This will increase your
awareness of what you spend your money on. After tracking your expenses for a month,
create a monthly budget and set monthly targets for the spending categories. This
allows you to compare your expenditures in each category during a given month,
and this data can help you see if you were on, over, or under budget for each expense.
Studies have shown that consumers with a budget feel more in control,
more confident and more secure. So what are you waiting for? Get a budget right away.
Number 5: You always want to live your best life
With the emergence of social media, our idea of “living the best life” has been altered.
With the “You Only Live Once” and “Fear of Missing Out” culture hanging over our heads,
the social pressure to live large has never been greater.
For many, the general idea of a good life is owning a big house, overpriced shiny chains
and accessories, a Range Rover, and perhaps going on a vacation to an exotic destination
overseas every three months. As a result, many people are willing to max out their credit cards,
take out loans, or take out ridiculously large mortgages to fund these pleasures.
In actuality, going into massive debt is not the right way to live your best life. When your credit
card and mortgage payments become hard to manage, you aren't going to share photos of your monthly
statements on Instagram or any other social media platform claiming to be "#blessed." You
likely won’t be living your best life. Instead, you will be stuck in a financial catastrophe. So
re-evaluate your life and make sure that your idea of a good life does not include financial concerns
about paying bills or debts and an uncertain financial future for you and your family.
Patience and the willingness to delay gratification are two of the
most beneficial financial habits you can develop and nurture. On the other hand,
the notion that we require all the exciting and luxurious things trending on the market
is a lie. It's an illusion that every advertising campaign selling a lifestyle product or service
wants you to believe so that they can get you to spend money you don't have. This
habit keeps you in debt. Which, as far as I know, isn't everyone's idea of a good life.
Number 6: You believe money is scarce and hard to get
Do you believe that money is hard to obtain? Does the idea of ever being wealthy sound impossible?
If you answered yes, then you have a scarcity mindset, and that’s what's keeping you broke!
The sad truth is no matter how much money you earn, it will never be enough if you
have a scarcity mindset. So, the solution is not acquiring more money. Instead,
it's about changing your mindset about money and then acting on it.
As I previously said, everyone's career choices and financial circumstances are
different. If you have money problems and your current job does not pay well,
then you need to come up with a plan to get multiple streams of income, ideally
two or three. It all depends on your capabilities. What’s more, this digital era has created several
opportunities for us to make money. So coming up with something should not be hard for you.
For instance, you can start a blog, try drop shipping, flip things on eBay, or make things
and sell them on Etsy and so on. If your current job is not paying you well, consider learning a
high-value skill so that you can change careers or venture into freelancing or consultancy.
Generating income from multiple sources has worked for several millionaires. Therefore,
it could do the same for you. In the book “Rich Habits, Poor Habits” renowned
author Tom Corley and self-made millionaire Michael Yardney describe how they assisted
hundreds of ordinary people in becoming self-made millionaires by creating numerous income streams.
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To rap this video up, those are some of the poor money mindsets,
that if you do not get rid of, can keep you broke forever.
Now a quick question for you, do you have any of these bad money habits? Are there any others you
believe should be included on this list? Let me know your thoughts in the comments section!
Well thank you guys so much for watching. Like, share and subscribe if you haven't,
and with that said. Have a great day, and I'll see you in the next one.