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Many of us look for way to improve our finances. We read articles on how to save more, how to spend less, how to budget better and how to earn more money. All of these things are well and good, but they all require change. All of those positive aspects need us to take action, and break old habits, which can be hard to do.
My goal with this article is to highlight some areas of your life that may be holding you back financially. My purpose is not to point fingers or make anyone feel bad. My hope is to shine a spotlight on some common habits that prohibit you from getting a handle on your finances.
The thinking is that before you move forward, you must stop moving backwards. By first fixing the areas of your life you are already knee deep in, you can then move on to new areas that will further your financial future.
Below are some parts of your life, some habits or ways of thinking you may want to take a closer look at to see if you can adjust to further your progress.
- Your house poor- Basically your mortgage is more than 1/3 of your income, and approaching 50%. If you are paying more than 33% of your income towards your house you are house poor. So much money is going towards your house that there is not enough left to pay for expenses, have a life and save. Something will give, and generally it is the saving that is first to go.
- You jump from car to car- You take out a car loan and make the minimum payments. Once the car is paid off, or even before it is paid off, you begin to want a new car. Soon after you sparked your desire, you begin looking for a new car, and before you know it you are trading in your car, and starting the process over again with a new loan.
- You are an impulse spender- you buy on a whim. When you shop, the items on your list are less than what you walk out with. When you see something you want, you do not wait to get it, you go get it right away. You are subdued by end cap displays and in store deals. You justify your impulse buy as it is something needed, or forgot you did need, and are glad you saw it.
- Once you have something, you want something else- Contentment is not long lasting. After you get home with a purchase, you are already thinking of what you are going to buy next. You are driven to purchase by your lack of fulfillment. You get bored with your things quickly.
- You keep up with the Joneses- Based off of what you can see on the surface, you see the people around you living much better and happier lives than you. So you begin to emulate their fashion, possessions and habits. You do not see how they pay for things, but hey, if they have them and are happy, why can’t you do the same?
- You move from hobby to hobby- You justify your spending by masking it as a hobby. You collect all the accessories and equipment for this hobby. You take lessons, join leagues or take classes. Soon though you are bored of the hobby, and something more interesting comes your way, and you begin the process again.
- You think stuff makes you happy- You battle with yourself, saying if you only had this thing, you would be happy, and you won’t spend any more after you have it. You begin to base your worth, happiness, and mood from your purchases or your things. When someone around you gets something new, you feel bad, worthless, and belittled, but you know buying the latest and greatest can change all of that.
- You spend for the short term, and don’t think about the long term until it hits you in the face- You know you should pay off some bills, or pay down some debt, but you either ignore it or say you will do it next month, and you enjoy yourself in the short term, only to face the same problem again in a few weeks.
- You save what is left over- you know you should save, and you do. But after all your fun, bills, and other expenses, there is little left over that actually makes its way to savings. Maybe you save, but you end up taking money from your savings for other things, which in the end shows you are not making consistent progress towards your savings goals.
- As your income increases, your lifestyle increases- when you get a raise or new job, you buy a new car, house, or toy to go with it, or you splurge on a vacation to celebrate. As your income grows, so do your expenses. Instead of eliminating debt, saving more or giving more, you find new and bigger ways to spend your new found money.
I could go on, but these are some general areas that many fall trap to with their money habits. As you read these, I hope at least some of them sound very foreign and strange to you. I hope you ask yourself “who would do that?” for at least a few of these. If you find yourself relating to any of these, it means you are not doing your best to maximize your finances. I am not saying I am perfect or not at fault, as we all have areas we need to work on. But if any of the above resonates with you, I hope you take a few minutes to reflect if it is important and if it is something you want to change. If you do want a change, great! There are a countless number of resources available to you.
Notice I did not offer any solutions to the above scenarios. My purpose for this article was not to offer quick solutions, but rather to simply say out loud some of the habits we all suffer from that hold us back. If you recognize that you may find an area from above that is in need of change, you have completed the first and one of the hardest steps to getting back on the financial track.