Top 12 Wealth Killers You MUST Avoid At All Costs

Summary

This video script warns about 12 wealth traps that can hinder financial progress. It advises against new car purchases, emphasizes the financial risks of certain relationships and divorce, and cautions against gambling. The script also addresses the pitfalls of lifestyle inflation, the misuse of student loans, neglecting health, and the costs of smoking and drinking. It urges viewers to avoid instant gratification, misuse of credit, perpetual renting, and the financial burdens of pets and children, suggesting that timing and financial readiness are crucial for such life decisions.

Takeaways

• 🚗 Avoid the new car trap: A reliable, paid-off vehicle saves money in the long run compared to having a car payment.
• 💔 Be mindful of relationships: Partnering with someone who has different financial goals or going through a divorce can significantly impact wealth.
• 🎰 Don't gamble excessively: Gambling can quickly become a wealth drain, with many Americans spending over $1,000 annually.
• 📈 Avoid lifestyle inflation: As your income grows, resist the temptation to increase spending and instead invest in assets.
• 🎓 Be cautious with student loans: Take on loans only if you're certain about your career path; many borrowers end up with massive debt and no degree.
• 🦷 Prioritize health maintenance: Preventive care, like regular dental cleanings, costs much less than expensive health repairs later on.
• 🚬 Avoid smoking and excessive drinking: These habits can cost millions in the long run due to personal and health-related expenses.
• ⏳ Embrace delayed gratification: Instant gratification leads to poor financial habits, while wealth is often built by delaying unnecessary purchases.
• 💳 Use credit responsibly: Pay off credit cards in full each month and avoid high-interest debt that could damage your credit score.
• 👶 Avoid major financial commitments, like pets or children, unless you're financially prepared, as these can significantly impact your budget.

Q & A

What are the 12 wealth traps mentioned in the script?

The script outlines 12 wealth traps that can hinder financial progress: 1) New car trap, 2) Relationships, 3) Gambling, 4) Lifestyle inflation, 5) Student loans, 6) Poor health decisions, 7) Habits like drinking and smoking, 8) Instant gratification mindset, 9) Credit card misuse and buy now pay later services, 10) Perpetual renting, 11) Having children or pets, 12) Not planning for future expenses.

Why is buying a new car considered a wealth trap?

Buying a new car is considered a wealth trap because it involves significant ongoing costs such as car payments, insurance, and maintenance, which could total over $1,000 per month. Successful individuals often opt for reliable used vehicles to save and invest elsewhere.

How can relationships impact wealth accumulation?

Relationships can be a wealth trap if they involve excessive spending or lead to divorce, which can be costly, especially with the high divorce rates. It's advised to align financial goals with a partner for better wealth accumulation.

What is the average car payment in 2024 according to the script?

The average car payment in 2024 is stated to be $760 a month, which includes additional costs like auto loans, insurance, and maintenance.

Why is gambling considered a wealth killer?

Gambling is considered a wealth killer because it can lead to spending money not budgeted for entertainment, and the potential losses can be significant, with serious addictions costing tens or even hundreds of thousands of dollars annually.

What is the impact of lifestyle inflation on wealth building?

Lifestyle inflation impacts wealth building by increasing monthly costs as income rises, which prevents getting ahead financially. It's advised to use raises or promotions to accelerate asset accumulation rather than increasing personal expenses.

How can student loans become a wealth trap?

Student loans become a wealth trap when the education is not used or if the education is not completed, leading to significant debt without the benefit of increased earning potential. The average student loan debt in the US is over $40,000 per borrower.

What is the average cost for raising a child in 2024 according to the script?

The average cost for raising one child in 2024 is $26,000 annually, or just under $2,200 a month.

Why is failing to make good health decisions considered a wealth trap?

Failing to make good health decisions is a wealth trap because the cost of maintaining health is significantly less than the cost of repairing health issues later. For example, skipping dental cleanings can lead to much more expensive procedures like root canals.

How does the habit of drinking alcohol or smoking affect wealth accumulation?

Drinking alcohol or smoking routinely can cost significantly in terms of personal costs, health costs, and lower wages associated with these habits. The average lifetime smoker spends $1.4 million, and the average over consumer of alcohol spends $22,000 a year.

What is the advice given for using credit cards?

Credit cards should be used for building credit and earning cash back rewards, provided that the balance is paid off in full every month to avoid interest payments. Misusing credit cards can lead to poor credit, which is a wealth trap.

Why is having children or pets considered a wealth trap if not planned for?

Having children or pets is considered a wealth trap if not planned for because it can be extremely stressful and costly. The average pet owner spends $1,400 annually on one pet, and the average cost of raising a child is $26,000 annually.