Bad Habits Keeping You Poor

Building wealth starts with your mindset but the bad habits keeping you poor are all around you and you need to be able to recognise them for what they are. Have you ever wondered where all your money went shortly after you got paid? I know I have wondered in the past when I did not have a good control over my personal finances. I have shared many times on the blog the 3 financial mistakes I made in the past and how I was able to pay off my debt on a low income in 18-months. In this post I will share the bad baits keeping you poor month in and month out and tips on how to come out of the circle.

Everyone has a potential to be well off but its all in your mindset, what does being well off mean to you? Is it ‘£1million in your bank’ or does well off mean you have enough money for your basic needs, debts paid off (or being paid off), to save and to have fun? We all view things differently and some of our bad habits continue to keep us poor and we need to wake up, smell the coffee and change these bad habits. My aim in this post is not to tell you off but to make you mindful of the bad habits keeping you poor and how you can shift your mindset and your money to lead a more financially ‘well-off’ life.

Bad Habits Keeping You Poor

Ever since I read Atomic Habits by James Clear, I have been on a mission to foster more good habits in my life and make bad habit unattractive (one of the four rules in his book). I did not turn over a new leaf within a day, it took weeks and months of working on myself, identifying triggers and understanding myself better in order to install change in how I manage not only my time but my money as well.

We all have habits that we wish we didn’t have and have tried many strategies that have been unsuccessful, if you are in such a situation I recommend giving Atomic Habits a read, its life changing. When it comes to money habits, these bad habits will continue to cost you and rob you of the future you are meant to have. It doesn’t matter much how much you earn, if you can not manage a small income, you won’t much a large income either.

The bad habits keeping you poor are those that you are very familiar with but most don’t think too much about them. In this post I will share a few of them and together we can shift our mindset and be financially well off together.

Spending More Than or as Much as You Earn

When I started working immediately after university, I was happy that my corporate gig salary was bigger than my salary from my previous job as a carer. What I did not foresee was that an opportunity presented itself to me to be able to save money and still have money for enjoying the finer things in life. If I was financially savvy, I would have continued to leave on my carer salary whilst earning the corporate gig salary, save up the money, pay off my debt and still have some money to enjoy on the side.

What I did however was more money meant more spending, I enjoyed my life a little too much. I had no financial plans, no goals and no appreciation for the unique situation I had been given. I bought things I did not need, spent all my money faster than it arrived into my account and half the time when I would be looking at my bank statement, I didn’t even know where half of the money went outside of the everyday necessities. It took a long time for me to sit myself down, track my spending, allocate money for paying off debt, saving and fun money. You need to know what you are spending your money on so you don’t spent all of it or more than you earn.

No Budgeting or Financial Planning

It is still shocking to me that there are people who don’t budget their spending or even know where their money is being spent. I am not saying you have to track every single penny but its important to have a good idea of how much you spend on your basic necessities, what you are contributing towards paying off your debt, what you allocate as savings and how much fun money you can enjoy every single month. I personally prefer to budget my money and that includes allocating fun money in my budget because what’s the point of working so hard if I can not enjoy some of the money right now?

Budgeting your money helps you get a handle on your spending, understand areas where you can save money and also know where your fun money will come from. I have been budgeting for a long time now that its second nature to me, I am still working on my spending habits but all my spending is within the limits that I set for myself. Because I am able to budget, I know how much money I can allocate for fun spending and I make sure not to go above that limit.

Too Young to Save for Retirement

When I was in my early 20s and a colleague asked me if I contributed any extra money towards my retirement. I burst out laughing because to me that was ludicrous, my younger self thought I am too young to be thinking about contributing extra to my retirement fund. As I am getting I realise the importance of contributing a little bit more towards my retirement fund. The standard contribution we make towards national insurance doesn’t translate to too much when you retire.

When I used to work as a carer as a young adult, I attended to this lady who used to tell me stories about having two pensions. I didn’t know how it worked but I was always curious how someone could have two pensions and she told me she used to pay the national insurance plus her company offered another pension scheme type-thingy which she paid into and she was able to enjoy a good retirement. This is so rare because I also looked after those who didn’t have two pensions and it was painful seeing them not able to enjoy their retirement became they couldn’t afford it.

Ignoring your Debt

Whilst I know a lot of people wouldn’t willing ignore paying off their debt, I know some who would rather bury their heads in the sand than face their problems. This biggest debt that most people incur outside of mortgages is credit card debt which is the easiest to accrue and hardest to get rid of. Paying a minimum amount every month keeps you in debt longer because most of the time you are just paying off the interest and your debt is not truly decreasing. There are people who would much rather ignore the debt thinking it would go away but it doesn’t it just continues to grow.

These days, there are companies that make money off buying your debt from your credit card company and making money off you knowing you won’t be paying it back anytime soon. Consolidating your debt might sound like a great option but actually its just another way to keep you in debt longer if not forever. Don’t ignore your debt, whilst paying a minimum amount everything is not ideal its is better than nothing. You can try using either the Avalanche or Snowball method to pay off your debt instead of ignoring it.

No one chooses to be poor but we as people have so many bad habits keeping you poor and its time to re-evaluate. Is buying something cheaper and in bulk just part of being smart and frugal with your money or is it keeping you poor? Is leasing a car that costs the sae as your annual salary just to get the latest model to show off to the Jones’s a smart financial or are you keeping yourself poor to impress the neighbours? These are the bad habit that most of us practice but don’t think too much about, instant gratification seems to be the name of the game. People forget that debt today steals from your future tomorrow, I takes away from future enjoyment which is a sad. Make wise financial decisions for you and your family, pay off debt today to protect your tomorrow.