sacrifice

9 Ways You Sabotage Your Financial Growth

Mikey Rox — Fri, 12 May 2017 08:00:08 +0000

I'm a take-responsibility-for-your-actions kind of guy, which is why I don't have a problem telling you that most of your financial problems are self-inflicted. Yes, we all get the short end of the stick sometimes, and extenuating circumstances compromise our bank accounts now and then. But by and large, if you're constantly lamenting you never have enough money or can't get ahead, well — you're probably sabotaging your own financial progress in one of these ways.

1. Lifestyle inflation

Mo' money, mo' problems. It's not just a song from Biggie, it's also an accurate reflection on how increased income doesn't necessarily improve your financial situation. If you're not careful, often as your wallet grows, so does how much you spend.

"When you receive a raise, it's challenging not to make upgrades to your belongings since you can afford to do so," says Coupon Sherpa saving expert Kendal Perez. "However, lifestyle inflation sabotages your financial goals in that you won't actually be richer; instead, your toys and debts will be more expensive, and you'll stay at the same level or be even worse off than you were before the increase." (See also: How One Nice Thing Can Ruin Your Whole Budget)

2. Refusal to sacrifice

As much as you want it all, sometimes that's just not possible — especially if the effort is making you broke. In that case, you need to step back, figure out what's most important to you, and sacrifice what you can live without. For example, if you're holding on to that fancy, expensive car despite barely making the payments, while other bills are also suffering, it's time to re-evaluate. That vehicle may be fun to drive, but it's probably not so awesome to live in.

3. Avoiding your financial fears

Managing your money can be intimidating. Unfortunately, brushing your money issues to the side won't make them go away. In fact, it will only exacerbate the problem, which will return with a vengeance if you disregard them for too long.

"We make excuse after excuse to avoid our fears, including not tackling our finances because numbers can seem scary," says Natasha Rachel Smith, personal finance expert at TopCashback. "Pluck up the courage to make time for and respect money; it will then respect you back and you'll be in control of it rather than it being in control of you."

It's not just managing your finances on a basic level, though. Your fear of money is probably preventing you from making smart investments that can improve your overall financial outlook.

"Fear of investing, or fear of new-tech options like high-yield online bank accounts, reduces the potential for financial growth," she says. "Knowledge is power, so educating yourself on those financial topics that scare you is the first and most important step toward overcoming that fear."

4. Relying on future success

I've heard it plenty of times before, and I've even said it myself: "I don't need to worry about my finances right now. I'm young; in a few years I'll have a good job and I can start thinking about things then." And then, BAM! Suddenly you're in your mid-30s trying to buy a house, catching up on a 401(k), supporting a kid or two, and kicking yourself in your own behind.

Millennial finance expert Erin Lowry, author of Broke Millennial: Stop Scraping By and Get Your Financial Life Together, wants you to cut that out.

"People use youth combined with a delusional idea of future success as an excuse far too often," she says. "You shouldn't buck healthy financial habits, like saving and investing in a 401(k) today, just because you think you'll be earning $200,000 by 35. There are no guarantees about your future, but you can control today's behaviors and set yourself up for a comfortable life."

5. Letting inertia keep you loyal

Ask anybody why they stay with their banking institution, and they'll likely tell you that it's a hassle to change. Is that how you'd respond? That mentality can cost you.

Money expert Michelle Hutchinson explains.

"Financial providers devise a number of incentives to keep you loyal to their services, but sometimes it makes sense financially to make a switch. Despite this, many Americans will stay with the same providers for years due to it being perceived as a hassle or little value to switch," she says. "Set a calendar reminder every six to 12 months to review your current banking, credit card, insurance, and loan providers to ensure you're getting the best deal."

6. Not planning for emergencies

One of the biggest mistakes people make is not being financially prepared for an emergency. If you don't have the money set aside to deal with a job loss, blown transmission, or other costly problem, you could be looking at a long road of debt, disappointment, and even depression. Find places in your budget where you can set some money aside each month, and get to it. Don't be caught off guard when your next emergency hits. (See also: A Step-by-Step Guide to Creating Your Emergency Fund)

7. Just wingin' it

Just want to let things happen because you're laid-back and easygoing and everything will work out in the end? Snap out of it, stupid. That's not how the world works. It is, however, how permanent unemployment and homelessness work.

"Winging it just doesn't work," says Wayne Bland, retirement plan adviser at Metro Retirement Plan in Charlotte, N.C. "Every client that I work with that has a good grasp of their financial situation has some type of plan. It may be a basic budget scribbled on a napkin or a full professionally prepared plan. The common denominator is that they all have some document to provide a measure of direction. Knowing what you hope to achieve financially in the near and far will help you decide how to save, spend, and invest."

8. Spending while emotional

Admittedly, I enjoy a good bit of retail therapy. Until the bill comes and I'm like, guess it's potato chip sandwiches for the rest of the month.

"The phrases 'treat yo'self' and 'retail therapy' speak to the instant gratification associated with spending money when you're feeling down," explains Perez. "However, making purchases when you're having a hard time is neither an emotionally nor financially sound way to manage your problems." (See also: The High Cost of the "Treat Yourself" Mindset)

If you tend to spend money when you're stressed, upset, bored, or down, there are ways you can avoid the temptation. Unsubscribe from retail mailing and catalog lists and steer clear of the mall. If you find yourself really wanting an item, make yourself wait 24 hours before buying it. You might be surprised to find the "want" diminishes simply by waiting out the impulse.

Finally, consider a hobby or alternative activity you can turn to in times of stress. Even something as simple as going for a walk can greatly improve your mood.

9. Not seeking help

It's not easy to talk about money woes — I understand that just as well as you do — but sometimes it's important to ask for help. If you have a family member or friend who's an expert in finance, maybe they can help you. If you don't want to let them in on your situation, consider consulting a professional that will help you improve and strengthen your problem areas with actionable advice. Help is out there; if you're in financial trouble, seek it. Don't wait until it's too late.

This article is from Mikey Rox of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

5 Money Truths That Aren't Always Obvious

David Ning — Wed, 22 Feb 2012 11:36:26 +0000

One of the beautiful things about life is that there are always pleasant surprises waiting to be discovered. Even with the sometimes mundane topic of money, there are many revelations to be had. Here are five such money truths that aren't necessarily obvious. (See also: 10 Monthly Bills You Can Slash)

Always Trying to Make More Money Is the Wrong Pursuit

The majority of us can name a few reasons why we want more money. Having the freedom to spend more time with our families, providing a comfortable environment for our kids, or having a comfortable retirement are just a few of the real motivations people have to earn more.

Yet, the way most of us try to make more actually undermines what we are trying to achieve because we always pour more hours into our money-making opportunities. Will you spend more time with your family if you work late into every weeknight? Will you be able to provide a comfortable environment for your child if you are always exhausted? If you spend all your time sitting in front of a computer for decades, do you think your health will hold up for a comfortable retirement?

Drawing the fine line between not working enough and working too much is a personal matter, but do take some time to make that decision, because more money doesn't automatically mean you are going to be better off.

Having Money to Spend Is More Satisfying Than Spending

It's natural to get used to what you already own, but once you spend that cash, it's gone forever. On the other hand, knowing that you have the money to spend is very comforting and will provide you with lasting joy. That's why you should save as much as you can as fast as you can. One day, you will have enough money to quit whenever you want, and that beats owning all those high priced merchandise any day.

The added bonus is that when you save early on and have your money working for you, high-priced merchandise will become pretty affordable too.

The More You Buy, the More You Want to Buy

When our impulses urge us to buy, the seemingly obvious solution is to satisfy that impulse. Yet the more we buy, the more we will want to buy because we end up being subject to the genius marketing efforts of the retail industry when we are out at malls, online stores, and other outlets more often.

This is, of course, a cycle that we can stop if we just start holding out.

Getting Savings When You Shop Doesn't Mean You Saved Money

Have you ever bought anything you don't need just because it was on sale? Even finding an online promotion code for 90% off means you wasted 10% if you didn't need that item in the first place. Retailers play to our emotions often, but we shouldn't repeatedly let them take advantage of us!

Frugal Living Is Actually the Opposite of Sacrificing

Many of us think of living frugally as some sort of a sacrifice. Yes, it's true that you are often making a conscious effort to not buy something you thought you really wanted. But sometimes you are actually giving yourself the opportunity to achieve so much more.

A few years ago, I had the opportunity to start my own business. If I was living the high life and had very high monthly expenses, I would never have had the guts to make the leap. And even if I did jump, the pressure of needing to pay for huge expenses right off the bat would probably have adversely affected my business decisions early on.

Fast forward a few years, and I'm making more money than I ever had, which gives me the opportunity to afford luxuries I could only dream possible while I was working the nine to five. Even though I never intend to inflate my lifestyle drastically, the ability to do so is comforting to say the least. And all this because I lived frugally at the beginning. Sacrificing? Hardly.

Not everyone will end up starting their own business, but too many people miss opportunities because they need the income of their current job. You never know when that opportunity will present itself, so it's better to be prepared .

This article is from David Ning of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread: