8 Bad Money Habits That Keep You Poor (part II)
If you’ve read part one of this two-part series, you’ll know that knowledge is the key to changing your bad money habits.
You need to know exactly where your money’s going. You need to understand compound interest. You need to recognise when you’re living beyond your means, and spending impulsively.
Once your sphere of awareness grows, your ability to change increases. Here are four more bad money habits for you to watch out for.
5. Bad money habits that keep you poor: buying money
I know — Friday night Netflix and chill would be way more fun with a shiny new 65” Samsung 8K TV. And with 24 months interest free? Next level Netflix is within reach.
But before you sign your happiness over to the eager sales assistant, let’s consider the reality.
It’s only interest free as long as you pay it off in 24 months. Which most people don’t do. Remember our archenemy, the compound interest supervillain? He’s smacking his lips, waiting for you to take out a loan. Because he only exists when you borrow money and don’t pay it back immediately.
If you really want a big ticket item, the best thing to do is save for it. No interest. No buyer’s remorse. No debt anxiety. You may even earn interest if you have your savings in a high interest account. Which of course you do, you smart cookie.
6. Bad money habits that keep you poor: falling for credit card rewards
I get it. Extravagant holidays, fancy air fryers, spa retreats. The promise of indulgence is hard to resist. Especially when all you have to do to earn luxury is spend money.
But when you tear away the attractive outside layer? Credit card reward programs are fiendish. Characterised by higher interest rates and higher annual fees, the costs often outweigh the benefits. Which means if you’re not super careful, you could end up with crippling debt.
Here’s the thing: credit card money is not your money. At some point, you’ll have to give it back, and pay for the privilege of borrowing it. The next time you reach for your credit card, try to remember this mindset shift. It’ll make it easier to resist the temptation of buying on credit — which will make it easier to reach your goals. Winning.
7. Bad money habits that keep you poor: indulging in ‘retail therapy’
As you flick through the latest edition of In Style magazine (borrowed from the library, of course), you discover your dream living room.
But before you add $5000 of exquisite furniture to your cart, ask yourself this, ‘Will that furniture really bring me joy? More joy than my own home? More joy than two weeks of making memories in Exmouth?’
Fact: retail therapy will not make you happy long term.
Want to stop being poor? Be less posh, more frugal. Check out Facebook Marketplace for frequent bargains. With a little patience and creativity, you’ll be able to pull your dream living room together in a way that suits your budget.
8. Bad money habits that keep you poor: lifestyle creep
Congratulations on your promotion! And the pay rise that comes with it — you earned it. Time to celebrate with a bottle of vino. And now you can skip the sales bays — it’s straight to your favourite $35 Bordeaux. Totally affordable with your new salary, right?
Hold up.. Let’s run some numbers. If you buy one $35 bottle every week, that’s $1820 a year. I’m sure that Bordeaux is magnifique. But is it worth nearly two grand a year?
When your income increases, it’s easy to fall into lifestyle creep.
Sure. treat yourself on occasion. The keyword here is treat. Because once you get comfy with the $35 drop as your weekly, it will be tricky to go back to the $15 sale section.
End the bad money habits — for good
Poor money habits paint a grim picture, right? But it doesn’t have to be that way. Because now you have knowledge. You can instantly recognise the money habits that keep you poor and you know how to change them.
And if you need a little help adjusting your habits?? Want some guidance in creating a budget that just works? Check out my values-based budgeting service. It’s judgement-free, jargon-free, and gets you on track to eliminating money worries for good.
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