MONEY HABITS

Hey everyone! 🌟 I’m excited to share some game-changing financial wisdom with you today. After spending a number of years immersed in finance—earning my degree in finance, qualifying in accounting, and working in investment banking—I’ve picked up some crucial skills for managing money. One of the most transformative lessons I’ve learned is recognizing and breaking free from bad money habits. So, in this video, I’m breaking down **nine common financial pitfalls** that might be holding you back and sharing practical tips to overcome them. Let’s get into it!

1. Paying Yourself Last

One of the biggest financial mistakes is paying yourself last. Robert Kiyosaki, in his book *Rich Dad Poor Dad*, highlights this as a key habit of the financially struggling. The poor people’s habit is to pay bills first—rent, utilities, subscriptions, social activities—and save whatever’s left, if there’s anything at all. Instead, the wealthy pay themselves first. As soon as you receive your paycheck, set aside at least 10% into a savings account. Treat it like a non-negotiable expense. This simple shift ensures that you’re prioritizing your financial future right from the start.

2. Getting Comfortable with Bad Debt

Debt has become almost normalized in our society. People are using credit for everything from shopping sprees to vacations. But here’s a hard truth: if you can’t afford to pay for something outright in cash, it’s best not to buy it on credit. Credit card companies thrive on our poor financial habits, with average interest rates hovering around 22%. This can quickly erode any benefits or rewards offered. Avoid accumulating debt by spending only what you can afford and paying off your credit card balances in full each month.

3. Lack of Financial Buffers

Not having a financial buffer or emergency fund is a major issue. Aim to save enough to cover at least six months of living expenses. This “safety net” allows you to handle unexpected events without derailing your financial plans. Start by paying yourself first, as discussed earlier, and once you’ve built up your emergency fund, use any additional savings to explore investment opportunities.

4. Ignoring Your Income and Expenses

Understanding your income and expenses is foundational to financial success. Many people fall into the trap of lifestyle inflation—spending more as they earn more. Instead, track your income and expenses meticulously. Know where your money is going and adjust accordingly. Successful individuals have a clear grasp of their assets and liabilities and set specific financial goals. Being aware of your financial situation helps you make informed decisions and stick to your goals.

5. Expensive Hobbies

Having costly hobbies can drain your finances. While it’s great to enjoy life, it’s essential to balance pleasure with financial responsibility. If you’re committed to improving your financial situation, you should either increase your income or find ways to cut back on spending. Building wealth involves both saving a larger percentage of your income and creating additional income streams. Consider side hustles, asking for a raise, or investing to boost your earnings. Saving alone has its limits, but increasing your income has virtually unlimited potential.

6. Overpaying in Taxes

Taxes can be one of your biggest expenses. The wealthy often use legal strategies to minimize their tax bills, such as investing through tax-advantaged accounts like ISAs or Roth IRAs, which shelter dividends and profits from taxes. If you’re not familiar with these options, it’s worth understanding tax rules and exploring ways to reduce your tax burden. Efficient tax planning can free up money to invest or contribute to causes you care about.

7. Delaying Investments

Waiting too long to start investing can be costly. Once you’ve built up a savings buffer, it’s time to put that money to work. Avoid letting it sit idle in a bank account, where inflation can erode its value. Diversify your investments to spread risk and adjust according to your financial goals. Look into various investment strategies, balancing safer investments with higher-risk opportunities, depending on your comfort level and financial objectives.

8. Chasing Savings Alone

Many people believe that saving more is the key to financial success. While saving is important, it’s not the only factor. To build real wealth, you need to focus on both saving and earning more. Whether it’s through side hustles, investments, or career advancements, increasing your income can significantly enhance your financial situation. A combination of prudent saving and proactive earning strategies is essential for long-term financial growth.

9. Lack of Financial Education

Finally, not investing in financial education can limit your potential. Continuously educate yourself about personal finance, investment options, and economic trends. Understanding these areas will help you make informed decisions and avoid common financial pitfalls. There’s always more to learn, and staying informed can help you navigate the financial landscape more effectively.

By addressing these common bad money habits and implementing these strategies, you can transform your financial future. Start small, stay consistent, and watch your financial health improve over time. If you found this video helpful, let me know in the comments and don’t forget to hit that subscribe button for more financial tips and insights. Let’s make smarter money moves together! 💰🚀