1. Overspending
The only things that come from consistent overspending are a negative net worth and debt.
Spending more than you earn is one of the most significant wealth-building barriers.
2. Chasing the flash
There is nothing wrong with owning nice things, but you should avoid obtaining nice things at the expense of your financial well-being.
If you can't pay for the items you desire in cash, you can't afford it.
85% of people carry a car note.
Yet, most can't cover a $500 emergency expense.
The math doesn't add up.
Looking nice is a fleeting feeling.
Focus on padding your financial portfolio first before investing in appearances.
Don't chase the flash.
Instead, chase financial freedom.
Focus on long-term satisfaction over short-term satisfaction.
3. Buying unintentionally
If you weren't planning on buying it, that's your sign that you probably don't need it.
We can buy things with a click of a button on our phones, making unintentional buying much more accessible.
If you didn't plan for it, walk away.
Before making large purchases, make it a habit to wait 48–72 hours to rethink the purchase.
You might end up forgetting the purchase altogether, or you might still want it.
Either way, thinking about your purchases helps to slow down your spending, which significantly adds up over time.
4. Saving versus investing
Most savings accounts earn little interest.
For the savings accounts that do earn interest, the rates match the average annual inflation.
If you desire to build wealth, focus on investing in assets that grow your money — depending on your risk tolerance (i.e., conservative, moderate, aggressive).
5. Not increasing your income
The average rate of inflation is somewhere around 3–6% annually.
Aim to increase your income to match this rate or be higher so you can beat the rate.
On top of that, be sure you put your money to work via investing so your money isn't burning.
6. Avoiding financial education
The only way I've been able to shift my financial situation is through education.
Education will transform your finances and help you create financial freedom and independence.
Read a book, attend a workshop, listen to audio, get a mentor, and focus on increasing your financial education.
Without financial education, I wouldn't be writing articles on personal finance because I would have no clue what I was doing.
They sure don't teach you about money in school, but that’s not an excuse to fail at money.
Your financial situation is your responsibility.
7. Maintaining a broke mentality
Do you use phrases such as:
"I can't afford that."
"How much does it cost?"
"That's out of the budget."
"That's expensive."
"I wish I could afford that."
All of these phrases perpetuate your financial situation.
To shift your financial situation, stop thinking broke thoughts and saying broke phrases.
There is tremendous power in how you think and what you say.
8. Funding your life with debt
If you can't afford to pay cash for something, you can't afford it.
The more debt you add to your life, the less financial freedom you will have.
Commit to a life with less debt and more financial options.
Most are strapped by debt and continue adding debt, thinking it's okay.
But why would being financially chained to institutions ever be okay?
9. Mistaking liabilities for assets
A home is not an asset until it's making you money or until it's paid off.
A car is not an asset. For most, it's a depreciating liability because 85% of people maintain a car note.
Student loans are not an asset, and you likely don't even need a degree to get a job unless you're going into a professional career (e.g., lawyer or doctor).
Aim to attend school for free, pay out of pocket, or consider payment plans.
Also, apply for grants and scholarships. You can take advantage of endless educational opportunities without going into tremendous debt.
10. Hoarding
Similar to unintentionally buying and materialism, hoarding prevents you from having physical freedom.
It also implies you're likely overspending your money on pointless things.
If I'm not using something consistently, know I won't use it anytime soon, or have barely used it, it must go.
Keep your belongings to as few things as possible.
Learn to be happy with less.
The happier you are with less stuff, the higher your chances of building wealth because it's not wasted on things.
Most Americans love buying stuff.
They have garages, storage units, closets, cabinets, and trunks full of sh*t they never use.
All that stuff they never use could be cash in the bank or assets in their investment accounts.
Don't get caught up in accumulation.
It's a dead-end road, and the only feeling that comes from it is emptiness.
After giving away over 75% of my belongings, life is better in every way.
Closing
Define what wealth looks and feels like for you.
It might look like the picture in this article or like being able to spend your time how you like in T-shirts and jeans every day.
There is no standard for what wealth looks and feels like. It’s up to you.
Create it for yourself.
This article is for informational purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any significant financial decisions.