Are you working quite hard but still you feel that you are poor and you struggle to make ends meet. Trust me, you are not alone. Many of us fall into money traps that keeps us from reaching that financial goals which we want to reach. Your bank account never seems to grow and you feel poorer day by day, this is because it is not about how much you are earning but how well you are managing your money.
In this post, we will go through 5 common money habits that might be quietly damaging your finances and keeping you stuck in a cycle of living paycheck to paycheck. Stick around to see if you can recognize and of these habits in your personal life and how you can break free to start building that wealth. Let's Get Started.
Number 1: Living Beyond Your Means
If you are a person who is constantly spending more than what you earn, then this habit is keeping you poor. It is quite simple to think about it, let's say you get certain amount of money i.e. your income and if the amount of money spent is more than the income, then you are in trouble as simple as that. I would say even if you are spending say, 95% of your income then also you are in trouble and that will keep you poor. Basically you are living paycheck to paycheck and not investing. Investing certain amount of money from your income will help you to increase your net worth and eventually you will become rich.
I know we all love to spend money on certain things, be it travelling, easting out, or having newest gadgets, but the problem comes when we are spending more. We have to keep the balance and thus start saving for those luxuries every month rather than spending today and start paying the EMI. This is most important and common reasons for keeping you poor, once you change this habit you are all set to become quite wealthy.
Number 2: Prioritizing Short Term Gratification over Long Term Stability
We live in a society which wants us to spend more money., every day you see so many advertisements telling you what to buy the next cool thing or telling you what you need in your life to make your life better, with sales coming everywhere be it in Amazon, Flipkart etc which actually forces us to spend money on things we don’t need. Actually it is designed in such a way that you should buy it now otherwise you will not get the discount, this gives us very little time to thing. I have also spend on a lot of things because of this impulse buying. But I have learned my lesson before my finances get affected. I don't do it now rather I spent money on achieving the long term goals. It is ok to compromise on your short term gratification which allows you to fuel those long term goals. I am not saying that you should not buy anything, you should but give it a week time to think that do you really need that item, if yes then go for it. If not then save it for the future.
Number 3: Not Having the Emergency Fund
If you are living paycheck to paycheck then you have no safety net in tough times and thus you will not have any support when the hard times comes. Which makes it quite stressful and bring financial instability in your life. Unexpected expenses can come up any day and if you don't have that setup your savings or even your future paycheck will be compromised. So it is recommended to have 3 to 6 months of your salary as your safety net which allows you to weather anything that comes your way. Let's say that you unexpectedly lose your job, but you know that you've got that pot of money there in order to support you through that tough time and knowing that you have some space to reflect review and think about your next steps without the building pressures of the financial burdens that you have.
Number 4: Relying on One Source of Income
When the pandemic hit, people start realizing that how vulnerable everyone's job is and how quickly you can lose your income and your livelihood in the blink of an eye. And it is the case even now, with so many layoffs is happening in the tech industry having one source of income is actually bad. Having multiple source of income will give you that peace of mind because of one of those sources of income drop, you will have the security and income from another source. Apparently everyone should have at least 2 sources of income and try to increase it further to strengthen the security. For example, I am working on ETF ki Dukan (Link in the description) which is my second source of income which is giving me around Rs 10K per month in good months which is nothing but passive income for me. And this will continue to grow and fetch me more. Along with I post on Hive where I am getting somewhere between Rs 5K to Rs 10K which is again a passive income source for me. Link in the description. So it's better to have a second source of income which gives you the security.
Number 5: Working for Less than your worth
A lot of people in the name of having steady job works for a lot less money than they are actually worth of. Historically employers will pay the current employees minimum hike whereas when they hire any newbie they pay a good amount of money to them. And thus in the long run, the employees who stays in a same organization actually earn quite less than their peers. Recently an Indian company have paid highest 4.5% hike to their employees which is substantially lower than the inflation, that means you are getting poorer and poorer, by each year. I know people scare to move jobs which Is completely natural, but you have to break this trend otherwise you will become poorer by poorer each year. Start negotiating the hikes with your current employer, if not you have to change jobs where you can easily bag +20% hike from your current salary.
These are the 5 common reasons which is keeping you poor, so if you are able to remove this common money habits then you can get yourself in a comfortable financial position and thus you will start accumulating the wealth and become rich one day.