Almost all people admit to worrying at least once a week about their financial future. The wrong attitude to money can leave even the richest people pennilessThe good news is that it may not be as hard to break those bad habits as you think.
You do not track spending
You should be tracking every penny you spend. Set a budget and know where every penny goes.
Always look at bills from restaurants, hotels or retail purchases, much less the grocery store, to make sure that they weren’t overcharged. Compare prices for items you routinely purchase, such as their cell phone bill.
We recommend watching the little costs that we normally don’t pay attention to. The $10/month accounts add up over time. The more of them you have, the more money will be going out of your account each month.
You do not plan ahead for big expenses
We recommend adding a line to your budget for big upcoming expenses like vacations. You can set up a savings account and have money automatically transferred into the account from your checking account, or from your paycheck if your employer allows it.
Putting a big expense like a vacation on a credit card can be risky—even if you think you can pay it off soon. Interest adds up quickly. And if an unexpected expense comes up and you’re late or miss a credit card payment, you can get hit with a penalty fee and a higher interest rate on the balance you owe. A late or missed payment can also hurt your credit score, which can make it harder to get a loan (or a good rate on a loan anyway) down the road.
You make emotional purchases
Rich people who are going broke have a nasty habit of making emotional purchases. For example, when they’ve had a bad day at work they may go on a Amazon spending spree, or they may determine a couple of times a week that they have to have DoorDash because they are depressed about something and don’t want to cook.
Be frugal no matter what stage of life you’re living. Use coupons, look for the best bargains, and cause a scene if they’re overcharged.
You do not have multiple streams of income
Five-year study of self-made millionaires discovered that a majority of them have multiple streams of income. In fact, 65 percent of the millionaires he studied had three streams of income, while 35 percent had four streams.
Having multiple income streams makes a lot of sense. When one stream is negatively affected by systematic economic downturns, of which you have no control, the other streams can come to the rescue and help you survive the downturn, without seeing your lifestyle dramatically affected. This also means that you follow the rule of, “not putting all of your eggs in one basket.”
You Do not set up an emergency fund
Emergency fund is the ABC of personal budget planning. Financial experts typically recommend saving enough to cover three to six months of nondiscretionary living expenses like rent, utility bills and car payments. That way you’ll be prepared if you get hit with an unexpected expense or lose your job, and you won’t have to turn to your credit cards—or your parents—to cover your bills.
Setting up an emergency fund can also help you get into the good habit of saving money for your future. The more money you save, the easier it will be to keep from falling back into bad habits.