9 Money Habits Keeping You Poor - Don’t Make These Mistakes!

9 Money Habits Keeping You Poor - Don’t Make These Mistakes!

We break down the 9 critical money habits that are keeping you stuck in a cycle of poverty. Learn the common mistakes and how to correct them to start building wealth and financial security today. From overspending to neglecting savings, we cover it all.

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BAD MONEY HABITS THAT KEEP YOU POOR:

Number 1: Paying Yourself Last.
I first heard of this in the book Rich Dad Poor Dad by Robert Kiyosaki. Robert explains that there are two types of people when it comes to paying bills. The first way is the poor people’s habit: paying yourself last. This means, as soon as your paycheck comes in, you pay your rent, your phone bill, your subscriptions, your social plans, and then save whatever’s left over—if there’s any money left to save.

The second way is the rich people’s habit: they pay themselves first. This is what you want to do. Take a minimum of 10% and put that into your savings account the minute you get paid. Treat it like paying a bill. This guarantees that you’re saving money before you spend it on other things. By prioritizing your savings, you're ensuring that your financial future is secure, and you're less likely to fall into the trap of spending everything you earn.

Number 2: Getting Comfortable With Bad Debt.
Debt has become the norm, with people using it to buy the smallest of things, like presents or clothes. My rule is simple: unless I can afford to pay for something outright in cash, I shouldn’t be buying it with any form of debt. Remember, credit card companies make money when you’re bad with your finances. The average credit card interest rate is 22%, which can easily cancel out any benefits or rewards.

Number 3: Not Having a Buffer.
Start by paying yourself first and putting away 10%. Once you have six months’ worth of expenses saved up, you’ll have a financial cushion. This buffer is essential before you start building your investment fund. Life is unpredictable, and having a financial buffer helps you manage emergencies without derailing your long-term financial plans.

Number 4: Not Knowing Your Income or Expenses Properly.
Until you know your starting point, how do you know where you want to be? Lifestyle inflation is a real thing—your spending rises as your income rises. The more money you make, the more you spend. It’s crucial to have a clear understanding of your financial situation, including your assets and liabilities. This will help you set financial goals and take steps to achieve them.

Number 5: Having Expensive Hobbies.
Many people love to shop or engage in costly activities. If you want to improve your financial position, you need to either save more of your existing income or create additional income streams. Ideally, you should do both. You can't build wealth if you're only focusing on saving because there's a cap to how much you can save. You also need to think about how to make more money.

Number 6: Thinking That Saving Money Alone Will Make You Rich.
There’s a cap to how much you can save, but there’s no cap to how much you can make. Whether it’s investing in the stock market, asking for a pay raise, or starting a side hustle, you need to think about both saving and making more money to truly build wealth.

Number 7: Paying Too Much in Taxes.
Taxes will likely be the single biggest expense in your life. While everyone has to pay taxes, the wealthy understand tax rules and use them to their advantage. They hire tax advisors and use tax-advantaged accounts like ISAs or Roth IRAs. Even if you prefer to pay more taxes, understanding the tax rules can help you use your money in ways that align with your values.

Number 8: Waiting Too Long To Invest.
Once you have savings and a buffer, start investing to make your money work for you. Diversify your investments to weather different situations. Avoid leaving excess money in a bank account because inflation will erode its value over time. Start looking at investment strategies as soon as you can.

Number 9: Not Caring About Your Finances. You need to be mindful of your money and see the numbers in black and white. This will trigger you into action and help you build wealth. Understanding your financial situation is the first step toward improving it.

DISCLAIMERS & DISCLOSURES

This content is for educational and entertainment purposes only. Do Finance does not provide tax or investment advice. The information is being presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. All investing involves risk, including the possible loss of principal.