15 Bad Money Habits You Need To Break Immediately

you know there are some people out there that are very good at making money but for some reason they never managed to become rich they work hard every day but no matter how much they earn money seems to just slip through their fingers you ever wonder why well the answer is by no means simple but it has a lot to do with what we like to call bad money habits and believe us when we say you don't want to ignore them unless you want to remain stuck in the loop that keeps most people average so why not prevent that by watching this video here are 15 bad money habits that you need to break immediately number one impulsive buying now we feel like this should be at the top of the list because a lot of people are simply unaware of it we all feel this habit creeping up every single day when we leave our houses impulse buying is the act of purchasing something without initially planning to do so imagine you're at a grocery store to buy some bread and milk you end up with a new type of cookie that you see at the checkout that is impulse buying an unplanned decision to buy a product right before the purchase it often happens because something caught your eye or you felt a sudden urge to own that product and there are many factors that can trigger impulse buying one common trigger is emotional states like stress or excitement which can make you more susceptible to making a spontaneous purchase other times it's the result of effective marketing strategies like having enticing items at the checkout line or offering limited time discounts that create a sense of urgency thank you social media and online shopping have also made impulse buying easier with ads tailored specifically to your interests with one-click purchases yes marketing agencies have mastered the art of triggering this Habit in people and make no mistake okay impulse buying can significantly affect your financial life while a small unplanned purchase might seem harmless if it's perpetuated well you're just going to end up buying a lot of unnecessary things and then you might find yourself in a situation where you're living paycheck to paycheck or have no money in an emergency fund remember if you want to achieve your financial goals you'd better understand your own biology number two keeping up with the Joneses now this one might sound familiar to some of you but just in case you don't know what we're referring to keeping up with the Joneses is a phrase used to describe the desire to emulate or surpass others Lifestyles or possessions particularly to maintain a how should we call it equivalent social status for example if your neighbor buys a new luxurious car you might feel pressure to buy a similar or even more expensive car even if you don't need one just to show that you're on the same social or economic level as them which sounds superficial and destructive right yeah that's because it is the Joneses can be your friends relatives colleagues or even celebrities you see on social media or TV which we hope you don't watch too much okay so what triggers it then well you've certainly heard us mention this before it's called social comparison a natural human tendency to evaluate oneself in relation to others and this is further Amplified by societal norms and advertising that push the narrative that we must constantly upgrade our lifestyle possessions and experiences to be happier successful now if you feel like you might be affected by this habit you might want to take a break from social media apps and focus on your journey and process in the real world remember most people are not as happy as they pretend to be and most likely you wouldn't want their life if you knew what's actually going on behind the scenes number three living beyond your means this bad money habit is the most common out there but at the same time it's the easiest one to fix now you might say a lux but how do I know if I actually am living beyond my means well it's pretty easy to figure it out take a piece of paper and write down all of your monthly expenses do your expenditures exceed your income your honest expenditures if the answer is yes well it means that you are and this is not advisable because it can lead to financial problems such as debt bankruptcy and a lack of savings for emergency or future goals overspending often creates a cycle where you're constantly trying to catch up with bills and expenses leaving no room for financial growth or stability and a lack of Financial Security can also cause significant Stress and Anxiety and these can lead to other serious health problems a sharp awareness of where you are now in life and how much you can afford will definitely serve you well number four paying only the minimum amount on your credit card this feature exists as a part of a service for a reason and while only paying the minimum amount might seem like an attractive option especially when you're short on cash it can actually cost you a lot in the long run and that's because surprise surprise the remaining balance you didn't pay off will be subject to high interest rates this is not some kind of benevolent free feature it's thereby designed to trap you the credit card company charges this interest every month when the balance remains unpaid so this means the longer you take to pay off your balance the more money you end up owing because of the accumulating interest so to make it simple imagine you borrowed a book from a friend but you didn't return it for a long time as time goes by your friend might start asking for a small fine for each day the book is overdue similarly when you don't pay off your credit card balance the bank charges you a 5 or interest just like how that fine for the book grows every day it's overdue the money you owe on your credit card grows every month that you don't pay it off so if this is a habit of yours you'd better start prioritizing paying your credit card debt as soon as possible number five never asking for a raise you are paid what you ask not what you're worth most people really make a habit of underselling themselves at every job they get but with this mindset you're not going to become wealthy anytime soon that's because in a capitalist system you need to know how to negotiate and evaluate yourself properly nobody is going to give you a raise or offer you more capital or a better price for the product and services you are the one responsible for that and if you're afraid to do so it means you don't have enough confidence in your skills or the product that you're selling but if you want to get ahead in life then you'd better change this habit an Alexa on our app we actually have a learning pack called building self-confidence from the ground up where we hold your hand step by step to understand what confidence is how our confidence grows as a child and how we can change course as adults if you haven't already go to alox.com app and start evolving your life for the better today number six not investing look saving money will never make you rich investing on the other hand can and will if you know how to make money work for you and take advantage of compound interest when you invest money especially over a long period of time you have the potential to earn interest on both the money you originally put in which is called the principal and the interest that you've previously earned think of it as your money making its own money but if you just keep your cash in a standard checking or savings account where the interest rates are often low your money doesn't work nearly as hard for you in fact you'll actually lose money by keeping it in your savings account and that's because the inflation rate is in 99 cases higher than the interest rate any bank will offer you seriously it's a scam and besides that banks are not actually the most safe place for reference you should see our video on the svb collapse anyway just to clarify inflation is the rate at which the general level of prices for goods and services is rising and subsequently purchasing power is falling so this means over time the money that you have today will buy less in the future by investing you're seeking to grow your money at a rate that outpaces inflation helping to ensure your money retains its purchasing power over time but beware okay there are good and bad Investments out there so you'd better do your research before going all in on something investing in things that you don't understand is a bad idea we'll talk about that later in the video so if investing is not yet a habit for you you'd better start learning everything about it right now it's high time you let money work for you and while we're still on the subject there's one more type of inflation you should know about number seven ignoring lifestyle inflation so we've mentioned this in another video already but in case you missed that one here's what you need to know about this habit lifestyle inflation also known as lifestyle creep is a financial phenomenon that occurs when your standard of living improves as your disposable income Rises so it means that as you earn more you start spending more often on non-essential items or services so for example if you get a raise at work you might move into a bigger house start eating at fancier restaurants or buy a more expensive car essentially your expenses increase proportionally or in some extreme cases disproportionately with your income so why is this a bad habit well lifestyle inflation can prevent you from reaching your long-term financial goals and achieving Financial Security if you continuously increase your spending as your income grows you might not save enough or invest enough money in your future needs it also means that you can easily become accustomed to a more expensive way of living which can be hard to sustain if your income suddenly drops moreover it makes it more challenging to deal with unexpected expenses or emergencies as you may not have set aside enough savings so in essence lifestyle inflation can lead to living paycheck to paycheck even at a high income level number eight keeping your money under the mattress now listen here there's a big difference between thinking money will make you rich and having some money an emergency fund for unforeseen events this bad habit that we're referring to here is having the same aim of hoarding a lot of cash believing it will somehow make you wealthy when you turn 70 or whatever if you're living in a developing country you've probably heard stories of your relatives who saved money in the decades later that money was worth nothing we've already explained this fix invest and pay attention to inflation otherwise the central banks will just make you poor and dissolve all the value of your Decades of Labor number nine lending money to people who you know will never pay it back look we know you probably don't want to hear this but if you've made a habit of lending money to people you know this to be true when you lend money it should be with the expectation it will be returned to you in full if it's not you're not really lending money at all you're just giving it away and while generosity is a good thing it can lead to financial hardship if you're giving away more than you can afford to lose moreover lending money to people who never repay you sets a bad precedent it teaches them that they can borrow from you all they want without any consequences and this can lead to a cycle where they keep on borrowing knowing that they won't have to pay it back over time this can severely damage your financial health and might even strain your relationship with the borrower so if you want to keep your finances and your relationships healthy it might be a good idea to quit this habit number 10 not paying your taxes some people learn this the hard way don't try to cheat the government nobody likes to pay taxes okay we get it all of us want to keep as much money as we want from the output that we're producing but Society has to function somehow and it's via taxes so when you don't pay your taxes the government doesn't receive the revenue it needs to fund public services such as Road repairs schools and health care it's like sabotaging society and while we know that this money is not often questioned the way it should be well there's not much to do about it right now over time unpaid taxes accumulate interest and penalties which means you can end up owing much more than your original tax bill and besides that you might even get into some serious legal trouble and that's certainly something that you would want to avoid number 11 investing in things that you don't understand investing in something you don't understand is like driving in the dark without headlights sure you might get lucky and reach your destination fine but you're also more likely to hit a wall or fall into a ditch when you invest in what you don't understand you can make misinformed decisions based on your knowledge of the market the product or the industry without that understanding you're essentially gambling Alec so you are not investing you could lose all of your money because of some risk factor you didn't even know existed hence this is one of the worst money habits you could ever promote number 12 not maximizing tax advantaged accounts so just a pro tip for those who don't like paying unnecessary taxes tax advantaged accounts like individual retirement accounts 401ks and health savings accounts offer significant tax benefits that can help you to grow your wealth more efficiently so for example contributions to traditional IRA or 401K can be deducted from your income reducing your tax bill for the year meanwhile the money in these accounts grows tax-free until you withdraw it in retirement hsas used for medical expenses offer triple tax advantages contributions are tax deductible the money grows tax-free and withdrawals for qualified medical expenses are also tax-free if you're not contributing as much as you're allowed to these accounts or if you're not using them at all you're essentially leaving money on the table by paying more in taxes than necessary but remember this is only applicable in the U.S if you're working in other countries you might want to consult a financial advisor to see if you can apply for a similar program number 13 relying on a single income stream relying on a single stream of income is like putting all of your eggs in one basket if something goes wrong with that basket oh baby you're in trouble if you lose your job or face an unexpected Financial challenge you'll have no other money coming in to help you cover your expenses on the other hand if you have multiple income streams like a part-time job rental income or Investments it's like having several smaller baskets if one basket Falls well you've still got the other ones to support you this way you spread out the risks and build a financial safety net and besides that you'll also have more money there's simply no downside here number 14 ignoring budgeting 99 of all money problems appear because people don't track their expenses and they refuse to budget in fact this is the very first step you should take in order to fix all of the bad money habits that you might have you need to have a clear understanding of your finances there's no other way around it and if you feel like you're too lazy to do that it's not important or that you can simply just budget in your mind as you go well we've got some bad news for your friend it's not gonna work and it's a sign that you are not taking your financials seriously enough and number 15 gambling and investing in get rich quick schemes we'll explain this last Point by quoting Naval ravacant because he said it better than anyone ever could there are no get rich quick schemes that's just someone else getting rich off of you this goes back to the world being an efficient place if there is an easy way to get rich it's already been exploited Building Wealth is a skill that takes time effort knowledge and a lot of sweat and anyone who tells you otherwise is only looking to take advantage of you and with that being said Alexa it's time to wrap up this video These are the 15 bad money habits that we think you need to break immediately now we're curious to ask what is a bad money habit that you need to break as soon as possible drop your answer in the comments below we're always curious to hear your thoughts and with that being said it's curtains on this video if you found it valuable don't forget to return the favor by tipping us with a like and a share and as always thanks for watching a luck so if you'd like to learn some more hey check out this this video next

Channel: Alux.com

Views: 219,756

Keywords: Alux, Alux.com, Alux Youtube, fine living, bad money habits, money habits, money tips, poor vs rich habits, personal finance, habits that keep you poor, money habits to break, bad habits, money saving tips, money habits that keep you poor, personal finance advice, money habits for 2021, personal finance tips

Id: 06f7DI68GvI

Length: 18min 43sec (1123 seconds)

Published: Tue May 23 2023