Does your monthly money habit set you on a trajectory for wealth or holding you from realizing your potential? The answer will surprise you. Unless you are susceptible to extremely bad habits such as maxing your credit card or over-drafting your check accounts, it is easy to assume that you are faring well. However, there are hurdles to wealth that do not manifest red flags since the behaviors are widespread. Consequently, the majority of the people take it lightly. Most people do not realize they are in a delicate situation or just one-step to a crisis. If they do not recognize that their habits are putting them at risk, such people can even be more dangerous. If you want to get more personal touch regarding these problems you can always check out plagiarism free essays.
This article explores habits that hinder us from realizing our wealth and their respective advice on mitigating them and being back on track.
Getting side-lined by the emergency expense of about $2,000
Imagine daily things that can happen to you, like plumbing issues in the house or the car’s radiator getting out. If you do not have the cash to cater for such emergencies, then you are financially fragile. According to research, half of the millennials are in this category. Having no or little money for emergencies is a sign of financial fragility, though not always.
What to do
The solution is to start saving cash as little as $50 per month; this can save you about $600 per year. You can improve this by raising the savings to $20 per week.
Making minimum payments for the credit card
It means paying little monthly installments for your credit card. For instance, if you pay $140 per month for a credit card company that owes you $10,000, this will take you between 25 and 30 years to clear your debt. It means you will pay thousands of dollars on interest, which will affect your credit due to the high-utilization ratio. Carrying a balance does not help you to build a good credit history. The only way to develop a credit history and wealth is by paying your charge every month.
What to Do
Create a plan to clear your debt at all costs, even if you have to make tough sacrifices like doubling or quadrupling your monthly installments.
Having no idea of where the money goes each month
Paying with a credit card will always land you in debt, so consider paying using your debit card. Not keeping track of your transactions will surely land in financial problems. Therefore, mindless spending will not give you room to pay off debt, use the money for an emergency or save. Moreover, this prevents you from being rich.
What to Do
Create a budget once you have a budget in place and institute mechanisms that will make you follow it with no or little deviation.
Having no plan of paying off your debt
You need to know the difference between owing money and knowing the much, you owe plus interest and how long it will take you to be debt-free. The majority of the people do not take full ownership of the debts they have. They feel that it is the right thing to make monthly payments.
What to Do
You need to know the percentage of income dedicated to debt and the duration it will take you to clear the debt.