10 Bad Money Habits That Were Keeping Me Broke

Summary

In this insightful video, the speaker shares personal experiences and identifies seven bad money habits that can lead to financial struggles. From spending to 'save' on sales to using credit cards as a crutch, each habit is dissected to reveal its impact on financial health. The speaker emphasizes the importance of addressing these habits, like lifestyle creep and fantasy self spending, to gain control over finances. Strategies such as automating savings, investing, and prioritizing future self over instant gratification are suggested for a healthier relationship with money.

Takeaways

• 💰 Recognizing Bad Money Habits: The speaker acknowledges overcoming bad money habits, like overspending and poor financial mindsets, which were contributing to their financial struggles.
• 🛍️ Spending to Save: Buying items just because they're on sale doesn't equate to saving money; this is a common misconception that can lead to unnecessary spending.
• 🎉 Not Passing Up a Deal: The temptation to seize a bargain, especially in thrift stores, can lead to excessive spending and clutter, highlighting the importance of sticking to a shopping list.
• 🚶‍♂️ Lifestyle Creep: As income increases, there's a tendency to upgrade lifestyle and spending habits, which can overshadow financial goals like saving and investing.
• 👗 Fantasy Self Spending: Purchasing items for an idealized version of oneself rather than actual needs can lead to a disconnect between wardrobe and personal style, and wasted money.
• 💳 Credit Card as a Crutch: Relying on credit cards for purchases can lead to debt if not managed properly, emphasizing the need for budgeting and tracking expenses.
• 🏦 Not Prioritizing Investing: Dismissing the importance of investing due to misconceptions or lack of knowledge can hinder long-term financial growth.
• 💰 Paying Yourself First: The habit of saving and investing should come before treating oneself or non-essential spending, which can be facilitated by automating transfers to savings.
• 🚫 Prioritizing Instant Gratification: Instant gratification can lead to impulsive spending; waiting and considering purchases can prevent unnecessary expenses.
• 🙅‍♀️ Saying Yes to Everything: Constantly agreeing to social activities can strain finances; learning to say no can help maintain financial boundaries.
• 🤔 Income-Centric Thinking: Believing that financial stability comes only with higher income can delay the start of good money habits; it's essential to start budgeting and saving regardless of current income.

Q & A

What are some external pressures mentioned in the script that affect our financial situation?

The script mentions an exponential rise in the cost of living, a job crisis, expensive gas and groceries, and the feeling of doing more work for less money as some of the external pressures affecting our financial situation.

What does the speaker attribute their financial turnaround to?

The speaker attributes their financial turnaround to increasing their income and overhauling their bad money habits.

Why is buying things just because they're on sale considered a bad habit?

Buying things just because they're on sale is a bad habit because it can lead to unnecessary spending and accumulating items that are not needed, which doesn't actually save money.

What is the difference between 'spending to save' and 'not being able to pass up a deal' according to the script?

Spending to save involves buying items just because they are on sale, while not being able to pass up a deal refers to the tendency to buy more and spend more, especially when shopping secondhand, due to the low cost of items.

What is 'lifestyle creep' and how does it affect financial health?

Lifestyle creep is the phenomenon where people feel the need to spend more money as they earn more, often leading to an increase in lifestyle without a corresponding increase in savings or investment, which can affect financial health negatively.

What is 'fantasy self' spending and why can it be problematic?

'Fantasy self' spending is buying items for the person you wish to become rather than for your current reality. It can be problematic because it often leads to spending on items that do not align with one's actual lifestyle or needs, resulting in wasted money.

Why is using a credit card as a crutch considered a bad habit?

Using a credit card as a crutch is a bad habit because it can lead to a lack of tracking of spending, resulting in accumulating debt and a cycle of relying on credit without being able to pay it off in full.

What is the speaker's rule of thumb for avoiding unnecessary spending?

The speaker's rule of thumb is that if they can't pay for something in full today, then they can't afford it.

Why is not prioritizing investing considered a bad habit?

Not prioritizing investing is a bad habit because it can prevent individuals from growing their wealth over time and can lead to a focus on instant gratification rather than long-term financial security.

What is the concept of 'paying yourself first' and why is it important?

'Paying yourself first' means setting aside a portion of your income for savings or investments before covering any other expenses. It is important because it helps to automate savings, ensures that money is consistently put aside for the future, and can lead to better financial habits.

How does the speaker suggest dealing with instant gratification and its impact on finances?

The speaker suggests waiting before making a purchase and using a wish list to give oneself breathing room, which can help in resisting the impulse to buy things immediately and save money.

What is the issue with always saying 'yes' to social activities and how can it affect one's financial goals?

Always saying 'yes' to social activities can lead to unnecessary spending and a lack of financial boundaries, which can hinder one's ability to achieve financial goals such as paying off debt or saving for a specific purpose.

What is the problem with waiting-centric thinking when it comes to financial habits?

Waiting-centric thinking, such as waiting for a raise to start budgeting, can delay the development of important financial habits and behaviors, potentially leading to missed opportunities for saving, investing, and gaining control over one's finances.