Find that the bank account is maxed out or over-drafted at the end of each paycheck. Possibly, saving for a down payment on a house or retirement is more complex than imagined.
Can’t seem to figure out what is going on with the finances? You are not alone.
According to Prudential, “Nearly half (46%) of Americans describe themselves as financially struggling.”
You are not alone if you struggle financially or live paycheck to paycheck!
Reading articles like this one is the first step toward obtaining financial freedom. Below we have several surprising habits that are keeping you poor.
1. Bad Investments
Bad investments are all too common, and many are swindled out of their money with fake investment schemes.
Therefore, before putting money into something, ensure it is legit and safe and understand the risk and your risk tolerance.
Your risk tolerance is if you can afford to lose the money you invest. If so, how much of it can you afford to lose?
These are the questions you should ask yourself before researching the different types of investments.
Is there a timeframe for your money must be invested, what is the penalty if you pull out early? Are fees associated with the investment?
Make sure to research any investments. Understand the level of risk that comes with each. If an investment seems too good to be true, then be careful because, likely, it is.
Lastly, most investments take time to earn money. Be patient with the acquisition and avoid falling into a get-quick-rich scheme.
2. Not Budgeting
Budgeting is essential because it allows the creation of a monthly and weekly financial roadmap that allocates where all the money is going.
Budgeting will enable you to see where your money is spent and devise different ways to cut back. Budgeting takes honesty with yourself and time to get it right.
So don’t get discouraged if you miscalculated or under budgeted specific areas of expenses such as entertainment or food.
After each week, analyze if the budget was successful.
If going over budget, analyze the different areas exceeded within the budget and decide rather cut back on future spending or readjust the allocation of money.
3. Spending More than You Make
Spending money is great until realizing there is no money in the bank or over-drafting the bank account. It’s easy to do, especially if living paycheck to paycheck.
However, overspending can cost significantly with overdraft fees, especially if it is a regular occurrence.
Therefore, making it harder to save in the long run.
Cutting back on spending can be extremely difficult as you are denying yourself simple pleasures. Learning to say no to wants is essential to save money.
4. Not Paying Bills on Time
Not paying bills on time may not seem like a big deal, especially if you plan on paying them later. However, the fees add up quickly.
Paying $40 in late fees monthly can total $480 a year. Just imagine what you can do with $480 dollars.
Another reason it is essential to pay bills on time is that it gets harder to pay the further past due the bills become.
If the $130 a month electric bill was a tight squeeze, it becomes even harder to pay when the $260 bill is due for the current and prior month.
The further you get behind on payments, the tricker it is to pay.
The further behind the payments the more likely you are to risk getting services disconnected.
Reconnecting may cost a fee if your water, electricity, or gas gets disconnected, then reconnecting it costs a hefty fee. Yikes, that sounds like an expensive situation to be in when it can be avoided by paying bills on time.
Lastly, not paying your bills on time can lead to a bad credit score.
There are companies whose entire job is to help remove bad credit marks from the credit score.
However, it comes with a fee. Hiring a company to improve your credit score from derogatory marks is an additional cost that can also be avoided by paying bills on time.
5. Impulse Spending
Another habit that might make you poor is going into the store and buying things you did not intend to go into the store for. Furthermore, buying random items that are not needed.
When shopping and may be beneficial to ask yourself do I want this or do I need this? If it is something you want and not a need, then possibly take a few days to see if you still want that item before purchasing.
The problem with impulse spending is that it’s easy to spend significantly more than you intended on things you may not want a week later.
Try to identify if any areas create impulse spending.
This may be going to the grocery store and loading down your cart full of food you know you may not eat. Possibly it’s going to the gas station and stocking up on snacks.
Or maybe it’s going to a fast food restaurant and ordering a ton of cheeseburgers.
By identifying areas where you may have impulse spending, you can psychologically prepare before your next visit to help minimize impulse purchasing.
6. Overspending on a Home
Sometimes we find that the house of our dreams costs just a little bit over budget.
Therefore, deciding if it’s best to cut back on specific areas such as groceries, gas possibly even spending money on entertainment and clothes to afford this dream house.
However, a bigger house comes with more significant bills.
Heating and cooling a larger house will cost more. Then you have home insurance that may be more than initially thought.
The other thing most people don’t consider is that since a bigger house costs more, it likely adds more to the overall interest paid on the loan’s lifetime.
Especially if a downpayment is less than 20%, then there is the PMI insurance.
Therefore, most of your paycheck is likely going towards interest, insurance, bills, food, and gas, leaving little to no room for investments or savings.
This issue causes you to stay broke by not allowing you to use your money to make more money.
7. Buying Unnecessary Big Purchases
Big purchases are a quick way to become broke. Big purchases can be furniture, electronics, gaming systems, or even expensive fishing gear.
Big purchases may be a way to splurge to feel good.
However, it can leave you broke in the long term. When making a big purchase, it’s best to spend a few days determining if it’s something you want and will use.
Ask yourself if this is something you’ll be using in ten years. If not, are you okay with spending this much money on something that may not last? [Read also: 10 Ways Your Financial Choices are Wreaking Havoc on Your Life]
8. Costly Habits
Addictions can end up costing a significant amount of money.
Addictions include expensive craft beer or wines, coffee from the local coffee shop, cigarettes, or vaping. Addictions are things that we spend money on regularly.
Although it may only cost a small amount of money at the time, it can add up to cost a lot throughout the month or the entire year.
This is especially true when multiple addictions are involved.
Below are some examples of costly habits:
- Drinking coffee from a coffee shop.
- Craft beer in the evening.
- Smoking throughout the day.
- Subscriptions and Services
9. Subscriptions and Services
Another habit is making you poor is having multiple subscriptions and services.
One money waster is cable TV. Subscriptions to cable TV can often run you hundreds of dollars per year.
Most streaming apps offer a variety of television shows that you could watch on cable for a smaller fee.
Although having subscriptions to multiple TV and movie streaming apps can also cost you over time. Especially if you’re not using one or more of the streaming apps on and regular basis.
However, subscriptions for entertainment does not stop at television.
There are apps for newspapers, news sites, music, podcast, and so much more.
Thus, making it easy to spend hundreds and even thousands a year on different entertainment applications.
One of the ways that subscription services get you is by forgetting about the services you signed up for and are currently paying.
Therefore it is a good idea to check your bank statement semi-annually to ensure that you’re using all the subscriptions you are paying for.
Another habit that makes you poor is paying for services like cleaning your house or mowing your lawn. Although these services may make your life easier, they can also eat hundreds or thousands of dollars annually.
If looking for ways to save, cutting back on subscriptions and services is a great way to do this.
10. Eating Out
Eating out is another way that costs you significantly. Although fast food may seem affordable, it can cost up to $10 or more per meal. For example, spending $10 per meal twice daily eating out within 30 days will equal $600.
According to Fox Business, the average person spends between $156 to $135 per month eating out.
Thus, making eating out more expensive than going to the grocery store.
Even worse than eating out is going to the grocery store and then eating out, leaving the food purchased from the grocery store to spoil. I’m sure most of us are probably guilty of doing this at some point in life, myself included.
In conclusion, various surprising actions can result in financial difficulties, such as choosing lousy investment options, purchasing a home beyond one’s means, buying expensive items that are not essential, and frequently dining out.
Identifying these habits and taking steps to minimize their impact on your finances is important. By doing so, you can work towards financial freedom and avoid the stress of living paycheck to paycheck.
Remember, you are not alone in this struggle, and taking small steps toward financial responsibility can make a big difference in the long run.
Full List of Surprising Habits Keeping You Poor
- Not Budgeting
- Spending More than You Make
- Not Paying Bills on Time
- Bad Investments
- Impulse Spending
- Overspending on a Home
- Buying Unneeded Big Purchases
- Addictions
- Costly Habits
- Eating Out
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About Author, Sara Elizabeth
Writer, Amora V Lifestyle
Co-Owner of Elizabeth Besich Boutique
Sara is a writer for Amora V Lifestyle and is Co-Owner of Elizabeth Besich. Sara previously worked as a Marketing Manager and has her Master’s from Lindenwood University.
Sara studies everything of interest, from psychology, recipes, finances, mental health, and travel, thriving to find happiness and to live a good life.
When not learning, Sara loves all things outdoors, food, and hanging around great company. Furthermore, Sara loves spending time with family, who she is blessed to have in her life.
Note from the author: Through my articles, I hope to bring you joy and peace and that you enjoy it!
Disclaimer: The information provided in this opinion article is for entertainment purposes only. It should not be construed as financial advice and does not constitute an offer or solicitation for investment. We cannot guarantee the accuracy or completeness of the information presented, and readers should always conduct their own research and seek professional advice before making any investment decisions. The content of this blog is the opinion of the author and should not be attributed to any organization or entity. Any reliance on the information provided in this blog is solely at your own risk. Any reviews or comments written are the subjective opinion of an Amora V Lifestyle member and not Amora V Lifestyle. Amora V Lifestyle performs occasional checks on commentary left by users. It’s worth mentioning that we may also use comments in our articles. By posting a comment, you are giving us permission to use it in our content. Please check out Privacy Policy and Terms of Use for full disclosure. https://news.prudential.com/nearly-half-americans-struggling-with-financial-hardship-amid-pandemic-economic-fallout.htm
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