7 Destructive Money Habits You Need To Quit ASAP [#7 is so cool!]
Stop accepting mediocrity — start creating the life you’ve always wanted.
As Warren Buffet said, “The chains of habit are too light to be felt until they are too heavy to be broken.”
Truth is, your current financial situation is a direct reflection of your financial habits of the past years. In other words, your habits can either make you wealthy or completely broke.
In this article, I’ll share seven habits you need to quit asap, as they have a destructive effect on your finances — they keep people broke, stuck in jobs they don’t like, and far removed from financial security.
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1. Stop Seeking Happiness In Stuff
Consumer culture has one objective: to make you feel like you need designer clothing, expensive brands, the latest tech, and luxury cars to finally become happy.
Believe me, this is a flat-out lie created by advertising.
To use the legendary words of Matthew McConaughey in The Wolf of Wall Street, “It’s Fugayzi, fugazi. It’s a whazy. It’s a woozie. It’s fairy dust.”
Rarely can happiness be found in buying more stuff, studies show.
Yet, most people think that if they finally get that sports car, bigger house, or new designer clothing, they’ll be happy. This leads people to step into a rat race that never stops.
“We buy a pair of shoes. It’s great at first. But then we get used to them. We adapt. And then we want to buy another pair of shoes.” — Sonja Lyubomirsky (author of The How of Happiness)
They work hard — usually at a job they don’t like — to make enough money to buy something they think will make them happy.
Then, a few weeks or months after the purchase, the happiness from the purchase wears off, so they set their sights on an even more expensive version of that thing, hoping this will finally make them happy.
This is not a way to live your life.
It keeps you trapped in a financial rat race that you can’t win. Instead, here’s how you could use your money to maximize happiness, according to studies:
Saving for financial security
Investing to create freedom over your time
Spending time with loved ones (could be 100% free)
Spending time in nature (could be 100% free)
Traveling to amazing places
Working on your health and fitness
In other words, stop looking for happiness in stuff — it’s a lie that costs you a lot of money.
2. Stop Being Afraid of Investing
Isn’t investing risky?
Isn’t it just like gambling?
Don’t people lose their entire life savings in the stock market?
Yes, all of these things are true.
But they are only true for those who go into the stock market without having learned how it works.
You see, investing is something that can be learned. It’s a skill you can develop.
And to be honest, it’s no rocket science. It can be really simple. Especially when you only invest in broad-market ETFs and index funds.
Nevertheless, many people are afraid to invest in stocks because of all the horror stories they heard from people who lost money.
But, as Warren Buffett said, “Risk comes from not knowing what you’re doing.”
The majority of people who lost money in the stock market didn’t have a clue what they were doing. They were unprepared.
I guarantee, when you read the top 5–10 books on investing, you’ll know how to invest safely and profitably — and are better prepared than 80% of the people currently in the stock market.
Unfortunately, in these times, you almost can’t afford to be out of the stock market. With inflation running high and interest rates being pretty much zero on a savings account, the purchasing power of your savings is being eaten alive.
3. Stop Selling Assets At The Bottom
Again, most people who lose money in the stock market don’t have a clue what they’re doing. The most common mistake is that they let their emotions get the best of them.
“A lot of people with high IQs are terrible investors because they’ve got terrible temperaments. And that is why we say that having a certain kind of temperament is more important than brains. You need to keep raw irrational emotion under control.” — Charlie Munger
When stocks go up, they are euphoric and invest more money into the market than they should. Then, when the stock market goes down, they get scared and sell their assets at the bottom.
They buy high and sell low.
Instead of staying rational and following a solid financial plan with discipline, they sell at the exact moment when, in fact, they should be buying. They let their emotions get the best of them.
As John Templeton, one of the best investors of all time, said, “The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell.”
All in all, don’t sell your assets at the bottom — it’s one of the most destructive financial habits.
4. Stop Believing You Can’t Save
Even if you can only save $50 per month, do it. It’s about building the habit of saving so that it becomes part of your identity.
Believe me, if you don’t build the habit of saving when you have little money, you won’t do it either when you have a lot of money.
It is because of the financial habits you built before you were rich that you become rich.
So, get your financial habits and self-discipline in order even when you have little to save/invest. Just get started, even if it isn’t much.
5. Stop Lifestyle Inflation
Lifestyle inflation means that the moment you start making more money, you begin to spend more money (on luxuries, conveniences, etc.) merely because you can.
Now, I definitely think it’s normal to upgrade your lifestyle when you make more money — you work hard for a reason.
However, lifestyle inflation can quickly run wild.
I’ve been there.
The first month I earned more than $10,000, I wasted most of it on new tech, take-out food (mostly sushi), and other stuff I don’t even use anymore. Nor do I remember exactly what I spend my money on.
In other words, most of my hard-earned money from that month was wasted. That taught me an important financial lesson:
When you make more money, use 20% of the extra income to upgrade your lifestyle, but save and invest the remaining 80% to speed up your path to financial freedom.
All in all, be careful about lifestyle inflation. Use the extra income to speed up your process to financial freedom instead of squandering most of it.
6. Stop Playing The Comparison Game
Most people are stuck in a comparison game. Instead of focusing on building their wealth, they care more about showing off to other people how well they’re doing financially.
But, as Morgan Housel said in The Psychology of Money, “Spending money to show people how much money you have is the fastest way to have less money.”
When you care too much about what other people think of you, you start to make dumb financial decisions.
You get a more expensive car to show off to your neighbor. You get an expensive watch to show off to your colleagues. And you get the latest tech to show off to your friends.
Truth is, the more money you spend trying to look rich, the less money you have to actually get wealthy. The more money is spent on stuff, the less money can be invested in financial assets that help you create freedom.
This is why true wealth is silent. True wealth is pretty much invisible.
Wealth is the number on your bank- and investment accounts. These financial assets are invisible to other people. They don’t make any noise and they don’t shine bright like a diamond.
Because we can’t see or hear true wealth, we assume that someone who has a lot of expensive stuff is wealthy.
In reality, they might be broke and heavily in debt, but the only visible information we have about that person is that they have expensive stuff.
Therefore, our brains quickly jump to conclusions — in most cases, the wrong conclusions.
All in all, stop playing the comparison game. Stop trying to look rich for other people. Focus on becoming wealthy for yourself and your family.
7. Stop Accepting Mediocrity
It’s time to demand the best of yourself, for yourself. Don’t accept your own excuses anymore. Don’t accept mediocrity anymore.
You can fundamentally change your future when, today, you decide to learn new high-income skills, become financially disciplined, and make wise investments.
Take charge of your life.
Yes, I know, many external factors influence your life — the economy, your boss, your partner, your customers.
But, ultimately, you are in charge.
You decide to start a side-hustle today or to keep postponing it.
You decide to learn a new skill today or to waste hours scrolling through social media.
You decide to read a financial book or to watch hours of Netflix.
It’s your decision. It’s your responsibility. Stop accepting mediocrity — and start creating the life you’ve always wanted.
You got this.
CONTRIBUTED BY Jari Roomer
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