Warren Buffett: 8 Money Habits Keeping You Broke

In this video, we'll look at 8 money habits that keep most people broke and poor and how you can break free from them.

So here are the 8 bad money habits that keep you broke and poor. Avoid them at all costs:

#1. Not having a budget

If you're not careful, money can slip through your fingers without realizing it. This is especially true if you don't have a budget. Without a budget, it's easy to overspend on things you don't even need.

#2. Lack of emergency savings

It's no secret that one of the main reasons people are broke and poor is that they don't have any emergency savings. Why is having emergency savings so important? Because it gives you a buffer in case something goes wrong. Life is unpredictable, and things can go wrong at any time. If you don't have emergency savings, you're much more likely to end up in debt if something unexpected arises.

#3. No passive income

The vast majority of Americans are broke because they rely on just 1 source of income. Buffet is famously quoted for saying the following : If you aren't making money while you sleep, you will work until the day you die.

You can start by looking for a passive income side hustle that will allow you to make extra cash even when you're not working. There are many passive income side hustles out there, but my favorite one is perfect for beginners who want to work from home, and only have 5-10 hours of extra time per week.

So what is this side hustle that I love so much?

#4. Keeping up with the Joneses: 

Trying to keep up with your neighbors is a great way to spend more than you can afford. It would be best if you focused on your own financial goals and not what others have. 

#5. Making impulse purchases: 

Impulsive spending is usually driven by emotions such as excitement, happiness, or anger, and while they may give you short-term gratification, they will only leave you broke and in debt in the long run. 

Here are some tips to avoid making impulse purchases:

- Make a list of what you need before going shopping. This will help you stay focused and avoid buying things you don't need.

- Use the budget you created after learning about habit #1 in this video and stick to it. This will prevent you from overspending on unnecessary items.

- Avoid shopping when you're feeling emotional. If you're angry, sad, or stressed, you're more likely to make impulsive decisions that you'll regret later on.

- Take your time when making a purchase decision. If an item is on sale but you're not sure you need it, wait a day or two before buying it. Chances are you'll realize that you don't really need it after all.

#6. Not diversifying

If your investments are not diversified, you're in for a world of hurt. This also applies to your other sources of income. 

Don't just rely on a single job to cover all your expenses for life. Even at prestigious companies, no matter how smart you are, you could lose your job at any time. More than 10,000 highly skilled Facebook employees learned that the hard way.

#7. Lacking a financial plan

If you're like most Americans, you probably don't have a personal financial plan. In fact, according to Schwab's 2021 Modern Wealth Survey, less than one-third of American adults have a written financial plan. Without a financial plan, it's easy to make poor money decisions that can keep you broke and in debt forever. 

#8. Paying lots of taxes

Chances are, you are unhappy with the amount you pay in taxes. Some people may try to avoid paying taxes altogether, but this is usually not possible or legal.  But that doesn't mean that you can't legally reduce your tax burden. 

1. Tax-advantaged account, such as a 401k or an IRA. 

2. Itemize your deductions; this can help you save money on your taxes by deducting things like mortgage interest, charitable contributions, and medical expenses. 

3. Take advantage of tax credits, which can reduce your tax bill by up to $1000. 

4. Negotiate a payment plan with the IRS if you cannot pay your taxes in full. In Canada, you can send this same request to the CRA.

BONUS #9 : Inflating your lifestyle

When you live beyond your means, you are essentially spending more money than you have, which will eventually lead to debt and financial problems. To avoid lifestyle creep, you need to be aware of it and make a conscious effort to keep your spending in check as your income increases. 

📜 Disclaimer 📜
The information contained herein is for informational purposes only. Nothing herein shall be construed to be financial, legal or tax advice. Some of the links are affiliate links, and I will receive a small commission for referring viewers to the service at no cost to you.

#money #finance #budget #warrenbuffet