7 Expensive Habits That Will Keep You Poor | How To Be Good With Your Money

7 Expensive Habits That Will Keep You Poor | How To Be Good With Your Money

Have you ever checked your bank balance
and wondered where all your money went if this sounds like you then more likely
than not you were practicing money habits that will keep you poor forever
therefore in this video I will share with you seven expensive habits that
will keep you poor forever and if you’re new to the channel then hit the
subscribe button below for more life-changing content
hop in number one spending more than you make let’s face it spending money is fun
in fact there is scientific evidence to support this phenomenon when you’re
considering buying something your brain releases dopamine dopamine is a chemical
produced by our brains that plays a starring role in motivating behavior
it gets really soon we take a bite of food when we have sex after we exercise
and when we spend money in an evolutionary context it rewards us for
beneficial behaviors and motivates us to repeat them this is why humans have such
a hard time resisting spending and often the spending is only curbed when all
funds have been depleted and credit cards have been maxed out however when
people come into money this problem perpetuates maybe you got a bonus at
work or maybe you got a promotion these increases income trigger our inclination
to spend as we continue to chase that dopamine high but it’s not just the
dopamine high that makes us open our wallets and spend we also feel an
intense need to fit in with our peers and one way we can maintain our social
status in society is by having the nicest clothes or the newest car
unfortunately this incessant spending is keeping you broke you see if spend every
dollar you make you will never be able to save money invest or retire what
separates the rich from the poor is the management of their money whereas the
majority of people spend every new dollar they earn the rich maintain their
modest lifestyles as their incomes rise this allows them to begin saving more
and more money as a cash flow increases but the rich don’t just hoard this money
they then deploy this money into investments like Roth IRAs mutual funds
investment properties or their own business to allowed this cos to grow
further therefore if you want to become wealthy then you must avoid spending
more as your income Rises haba number two sacrificing future happiness for
present pleasure there are two types of people in this world those who live for
today and those who build for Tamar and unfortunately the majority of people
fall into the first category now don’t get me wrong enjoying the present is
very important because no one knows how long each of us have to live but more
likely than not you will make it to tomorrow and if you are always trading
future rewards for present pleasure then you will never be rich this trade-off is
actually one of the big differentiators between the rich and the poor when the
rich make more money they forego the desire to spend the money today and
instead sock it away into savings and investments that grow in value and
provide financial resources that can be used in the future to maintain their
current standard of living in financial terms delaying gratification is known as
delay discounting and it takes place when someone decides to discount the
value of future rewards to immediately gratify themselves even though accepting
a lesser reward isn’t exactly rational the rich know that future payoffs will
be greater than present rewards and studies strongly support how this
restraint from present gratification can lead to larger income realizations in
the future in a study of over 2,500 people participants were asked whether
they would hypothetically accept a smaller sum of money $500 USD or a
larger sum $1,000 USD after a delay which could be one day one week one
month six months or a year when the researchers use machine learning
algorithms to model the relationship between individuals tendency for delay
discounting and the other self-reported variables they found that delay
discounting was more predictive of income than age ethnicity race and
height therefore if you truly want to become rich then you must take the
future into perspective whenever you’re making financial decisions although it
is good to take care of everything in the present do your best to save for
your future hobbit number three you think you’re too young to worry about
saving let’s be real when we’re young our primary focus is to look cool and
fit in with those around us to do this we buy the newest clothes and the latest
gadgets to feel like we are part of the in-crowd we are much more worried about
our social status than saving for a house or for a retirement this carefree
attitude leads us to spending every penny we earned leaving little to
support us down the road in reality you were never too young to start saving and
just as importantly in sting take Warren Buffett for example he
bought his first stock at age 11 and over the course of numerous decades has
leveraged his mastery and investing to become one of the richest men in the
world let’s use an example to illustrate just how important it is to get serious
about your finances from an early age say we have two people Mike and Steve
Mike begins investing at age 19 investing two thousand dollars a year at
12 percent for just eight years meaning that his lost investment is at age 26
Steve on the other hand waits until he’s 27 to start investing and invest two
thousand dollars a year at twelve percent until age 65 who do you think
will end up with more money at age 65 well Steve seems like the logical choice
because he invested for 39 years compared to Mike’s eight years Mike
actually ends up with an extra seven hundred thousand dollars of received
because of when he started investing so as this example proves it is never too
early to start saving and more importantly investing your money habit
number four not tracking your spending we all think we know where our money
comes from and where it ends up sadly that’s not true for most of us we might
be aware of our major expenditures like buying a car or getting a new phone but
the small things usually it up or finance is more than the big ones for
instance when I used to not track my expenses more often than not I would
open up my credit card statement at Monson and be completely shocked by how
much bigger my bill was than I anticipated
the truth is that all the nights out coffees and clothes I was buying was
adding up to much more than a large expenditure would every month was
squandered any chance I had at saving money it was only once it came across a
quote by Peter Drucker what is a measured isn’t managed that I knew that
I had to change my ways and started tracking my expenses being the lazy
person that I am I avoided setting up complicated apps or programs and simply
began writing down all my purchases in my iphone notes this simple yet
effective strategy allowed me to see exactly where my money was going and I
still use this technique to this day however the strategy didn’t solve all my
money issues because while I was tracking my expenditures I still found
myself overspending which leads us to habit number five habit number five lack
of budget now maybe you are already tracking your
spending if so great but if you don’t spend according to a plan then you may
still find yourself in financial trouble you see you could be tracking the fact
that you are spending hundreds of dollars on drinks and clothes every
month causing you to rack up a significant amount of credit card debt
which will leave you in as much trouble as if you weren’t tracking at all this
is where a budget comes in and one of the best ways to budget is by using the
twenty thirty fifty method this budgeting technique works by dividing
your income in the following three ways fifty percent is designated to living
expenses like rent utilities and groceries the next thirty percent goes
towards entertainment costs like going out to eat or seeing a movie the final
twenty percent is meant to go right into your savings account this means that you
can now track your expenses according to the amounts you’ve designated at the
start of each month ensuring that your money goals are achieved habit number
six ignoring your debt as a June 2019 Americans are in more than 500 billion
dollars worth of credit card debt with the average household having a balance
of almost $7,000 on their cards this insane amount of debt doesn’t even
factor an auto loans student debt and the largest debt mortgages in short the
United States has a dead issue and part of this problem is that debt has gotten
out of hand for so many people that the only way they can cope with this
financial struggle is by ignoring it in fact the issues gotten so bad that 10%
of Americans say that they don’t even think they will ever be free of credit
card debt so how has this issue propagated to this extreme debt has
become an issue in Western culture for a few reasons firstly most people are
unaware of the almost infinite ways there are to make money meaning that
their income is limited to what their employer will pay them which more often
than not is not a lot second people are in a constant struggle to compete with
their peers in order to feel a sense of social validation which they do through
spending which has been perpetuated by the rise in social media finally dead
operates in a vicious cycle when debt isn’t paid off interest
charges are added to the already insurmountable balance meaning that the
debt grows bigger and bigger over time when this happens people begin to ignore
their debt completely which is cause the United States to have
more than 13 trillion dollars worth the data withstanding so if you want to
avoid this bad habit then make paying your debt a top of the list item on your
agenda work out a plan for this and stick to it
no matter what habit number seven constantly upgrading your electronic
gadgets it seems like every year technology companies released new phones
computers and tablets making the ones we currently have even more obsolete than
they already were well the newest guy just rarely have any
significant differences in their functionalities these companies know
that on a psychological level as humans are wired to want the latest electronics
but not because of their functions but because of the social status that they
can offer us for instance every year Apple comes out with at least one new
version of the iPhone and while some years the changes between models are
significant most years they aren’t but what does change is the fact that you no
longer have the newest model iPhone which leaves you as a social outcast if
the rest of your social circle decides to upgrade their phones and this
phenomenon is pervasive amongst every material item in the world like clothes
and of course carbs besides these upgrades being rather
irrational they erode our ability to save money upgrading your phone can
easily cost a couple hundred dollars which could be put to much better use if
it was saved or better yet invested in short it’s
okay to not have the newest gadgets and if you aren’t accepted by your peers
because of it then you’re probably not hanging around with the right people
anyway so when you feel the urge to upgrade your electronics coming on take
a page out of William Shatner’s playbook when he says if saving money is wrong
then I don’t want to be right thanks for watching if you want to go from the life
you have to the life you deserve then hit the subscribe button now

22 thoughts on “7 Expensive Habits That Will Keep You Poor | How To Be Good With Your Money”

  1. Practical Inspiration

    Your point on future rewards compared to present rewards reminds me of what Gary Vee talks about when speaking of patience. Great video!

  2. المغرب للعلوم والعملInternational

    me the first…….i pay to solve everything……….now that i am 42 relized a lot ………………….oooh young people do not repeat it…pls

  3. 1 Spending more than you make
    2 Sacrificing Future Happiness For Present Pkeasure
    3 You Think You'Re Too Young To Worry About Saving
    4 Not Tracking Your Spending
    5 Lack Of Budgeting
    6 Ignoring Your Debt
    7 Constantly Upgrading Your Electronic Gadgets

  4. This is true of spending money but a way of buying what you want, can also be used by buy things on sale for buy one get one or bogo! You buy items where retailers are selling two or three for one. You 2 for 1 item, sell one of the items at the price you spent or even more,and keep the other item; its like getting the item you wanted for free and pocket the residual value!ripleys

Leave a Reply

Your email address will not be published. Required fields are marked *