spending on drugs or cigarettes doing a drug or 2 in college may have been fine and seems harmless in the moment but the truth is that continues can have negative effects on both your health and your wallet if you calculate how much drug and cigarette users spend in a week or a year you'll see that many of them are hamstringing their ability to reach financial freedom for example a pack of cigarettes costs $9.08 and many cigarette smokers smoke a pack a day this amounts to 6356 a week or 3000 $305.12 a year the same amount of money could cover the property taxes on your home or a 2 week vacation but sadly many drug and cigarette use this fall into this habit to curiosity and peer pressure the end result of this habit is a hefty toll on both your health and your wealth in the long term as such try to avoid spending on these items as best you can spending more. Than you make this can be tempting to do especially as a young adult it can be tempting to blow your money right out of college when you're making a consistent income for the first time in your life buying that new car moving into a new house and flying first class are all appealing things to do but the problem with them is that you tend to end up living paycheck to paycheck if your income can't cover these costs this issue can be like into lifestyle inflation where by an increase in earning will cause you to increase your living expenses and increasing paychecks shouldn't warn you to increase your cost of living however the majority of people feel that they should reward themselves once they get paid instead discussion flow should be directed into prolong your wealth through investments and enquiring about sets probably the biggest reason that people spend beyond their means is to impress others they spend because their self esteem is low and with that these material goods they feel inadequate in comparison to others but this is flawed thinking as Dave Ramsey says we buy things we don't need with money we don't have to impress people we don't like many of us are guilty of this once you learn to delay gratification and forget about impressing people you will then be able to grow financially social media is another because of overspending people try to spend huge sums of money trying to look rich without actually being rich and internet entrepreneur for example who after being told he would never make it big in business might buy an expensive car when he makes his first big sale in order to prove his critics wrong again falling into the trap of trying to impress others this means impressing others is a never ending staircase I don't point to life there will be others to compete with or to show off to you have no business buying a graduate $2000 when your monthly salary is just $3000 be smart create a budget and track your spending to ensure you avoid spending more than you make
not investing wisely investments can be really tricky and many people put their money into things based on tips from friends or a strong conviction that the price is a popular stocks will keep going up want to. Of asset to just about everyone seems keen on these days is real estate many people think that once they on investment property that they'll be financially set they think that every month rent payments will just start rolling in and your income will exponentially increase unfortunately this is not always the case sometimes tenants missed payments appliances break or the value of the property to clients like all types of investments there is risk involved for the wise investor at the key to making their assets produced a reliable stream of income is to obtain the proper knowledge about a particular market or product before putting your hard earned money into this adventure in short make sure to do proper background work on whatever it is you want to get into and not just because your friends are making money from it or sales agent told you about the great benefits it has to offer
following get rich quick schemes get rich quick schemes are 1 of the surest ways of losing your money as the saying goes quick money brings quick problems and following a money scheme is bound to get you in trouble get rich quick schemes include things like Ponzi schemes pyramid schemes and make money overnight offers and are all set up to make the scheme originator rich by taking your hard earned money if you're looking into new business ventures and see opportunities that promise high returns with small risk in trade with caution think of it like this if it takes 20 years in a career to make $200000 any new venture saying that you can make that amount of money in a year then if it was legitimate wouldn't everyone be doing it in short when it comes to making money fast always a play your best judgment before signing on the dotted line
not having an emergency fund let's face it life doesn't always go your way and sometimes you need cash in order to rectify the situation you're in for instance your car could suddenly stop working you could lose your job or your washer could break unfortunately just about everything in life cost money which is why not having an emergency fund set aside is a critical money mistake sadly I 2019 federal reserve study. He found that almost 40 percent of American adults wouldn't be able to cover a $400 emergency with cash savings or credit card charge that they could pay off quickly about 27 percent of those surveyed would need to borrow the money or sell something to come up with the $400 and it it it's not 12 percent wouldn't be able to cover it at all luckily you don't have to be 1 of these people savings funds could be easy all you have to do is set up at 10 percent automatic deduction from your pay with your employer that will send a portion of your paycheck into an emergency savings account but how do you know when you've saved enough most financial gurus recommend you accumulate 6 months worth of living expenses but if you want to be extra cautious then 1 year's worth it's a great call the set
having just 1 source of income for most people having a sole source of income as a way of life and this income usually comes in the form of a salary unfortunately jobs aren't as secure as people perceive them to be in fact in 2018 alone US businesses laid off more than 20 1000000 people meaning that if your job was the only way you made money then all of a sudden you're cash inflow came to a halt when it comes to income sources you need to think of yourself as a treat your trees grow fruit only from 1 branch the simple answer is no they have different branches producing flowers and fruits and so should you should keep developing and learning new ways to lower your income work for you this is not only wise but a safe way to help you sleep at night
relying heavily on credit cards for many people credit cards can be a convenient tool for making purchases but for others they can be a 1 way ticket to debt although you need credit cards for some business applications relying on them heavily can ruin you financially the use of credit cards promotes impulse buying it gives you the mentality that you can afford anything and everything all within easy swipe in fact the 2001 M. I. T. study found that shoppers been up to 100 percent more when using their credit card to pay instead of cash so if you find yourself uncontrollably spending on credit. Form the habit of paying with cash instead when you pay by cash you're physically handing over money and seeing the depletion your wallet will make you feel the financial impact of the purchase much more then when you pay on credit
being scared to take financial risks as the saying goes in no risk no reward and in order to make money you need to take risks however at the risk you take need to be calculated for instance putting your money in an index fund is higher risk than leaving your money in a savings account but your money will never grow making that typical point 09 percent interest that a savings account yields instead investing in an index fund for example which mirrors the movements of the whole stock market has historically provided returns at 7 percent annually which is a calculated risk that in my opinion is worth taking
saving rather than investing we keep money in the bank you loses value over time due to inflation however when money is invested wisely it grows it's that simple mistake number 9 I mention that being scared to take financial risks is a mistake the people who are scared to take risks are people who save all their money and leave it to a road over time the only money you should be leaving in a savings account is money for your living expenses and your cash emergency fund in short you have to save to invest and not safe for the sake of saving money saved without any actual plan will end up being spent on things that are not worthwhile for instance when you leave money in your bank you'll become tempted to spend it on material goods like a new car new clothes or entertainment instead you should be getting that money to work for you by investing it whether that's in the form of stocks real estate REITs or start ups all these avenues offer a way to make new streams of income which is much more financially lucrative been letting your money do you value when sitting in the bank
having only 1 bank account is risky for a few reasons first having 1 baking count will make the management of your money really difficult by working with just 1 bank account. You have to keep all of your emergency fill in college savings in one spot then if you splurge and spend this cash you may risk not having emergency cash your tuition money readily available when you need it this is why you should have at least 3 bank accounts one should be used for emergency funds in case anything goes wrong another account can be for your day to day bills and a final account which I call the play account your play account is what money you allocate for entertainment or vacation and if you want to take things one step further you should set up an untouchable account this account can be used as a savings account that paycheck deductions are directed to every single month so you can automate your savings process and ensure your wealth grows over time
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