Making money isn’t always the hardest part of building wealth. Sometimes, how you spend and save your money can create greater roadblocks to success.
While it’s possible to gamble money away at a casino or lose your nest egg on a bad investment, more often people make smaller, everyday mistakes with their finances that add up over time. These common mistakes include: not having long-range goals; neglecting to budget; failing to track purchases; and using credit cards to pay for conveniences, luxuries and impulse buys.
It’s all too easy to succumb to the “money burning a hole in your packet” temptation. And this doesn’t just refer to cash anymore. Impulse buying is always more likely to occur when we have easy access to our funds. Keeping credit cards on you or keeping card information stored in apps and online stores may be convenient for a quick checkout, but it also doesn’t leave you much time to decide if you actually need that new lamp you saw online at 2 a.m. when you couldn’t sleep.
Similarly, credit cards eliminate the pain of seeing hard-earned cash turn into the luxury item we want, which might have mentally depreciated that high-end handbag or electronic device. And they increase the odds of overpaying for convenience items, such as transportation, lodging and even meals.
Budgeting often prevents impulse purchases and splurges. But less than 40 percent of Americans actually have budgets in the first place – and many of them don’t follow those budgets. Creating – and sticking to – a budget is a habit that must be built. Once you plan your purchases and expenses ahead of time, stick with that plan and you’ll likely begin to “find” money you never realized you had.
Purposes and goals help you stay focused on your spending and savings plans. Without goals, you keep a budget but then spend the excess – once you view it as excess. Or perhaps you save effectively but only earn minimal interest, wasting years of potential extra growth.
Whether you have $100 to your name or $100 million, even simple and seemingly harmless mistakes can impact your finances negatively and create headaches or even heartaches. If you would like an evaluation of your personal spending and saving habits, or a review of your strategies to grow your financial wealth, contact Jordan Dechtman, Denver registered investment advisor representative at 303-741-9772, email him at Jordan@JordanDechtman.com or visit our website www.JordanDechtman.com to schedule an appointment.