It is said that over 50% of Americans have some kind of financial problem. This high number is due to the money mistakes that too many people commit.
Some people face economic troubles as a result of some of the choices they have made. It is important to educate yourself on some of the major factors that cause financial hardship, that way you can do your best to avoid them.
For most people, the American dream is to own a house, retire with a nice amount of money, and enjoy their life to the fullest. Unfortunately, a lot of people never reach this goal because of their money habits.
If you want to have a nice retirement and build generational wealth, then it is important to educate yourself on money. Let’s take a look at some of the financial mistakes you need to avoid in order to help you on your wealth-building journey.
Buying Too Much Car
Millions of cars are manufactured and sold each year, but most people can’t afford to purchase them outright.
If you are someone who drives to work every day then a car is obviously necessary to have, but you need to make sure that you get a vehicle that is best for your situation.
Since most people can’t afford to purchase a new car with cash, they are usually stuck financing a vehicle. Some financing options can actually be beneficial, but you want to make sure you are not walking out the dealership with a high interest rate.
Along with this, most people get tempted at the car dealership and end up leaving with an expensive vehicle they do not need and end up not being able to afford the car payment.
The last thing you want to do is get stuck with a big car payment just because you fall in love with a vehicle. You also have to consider the other expenses that come with a car, such as insurance, maintenance, and fuel.
If you can, your best bet is to try to purchase a used vehicle. Along with this, you may want to consider one that is fuel-efficient and costs less to insure and maintain.
If you are paying more than you need to, you are missing out on other financial opportunities which may include paying off bad debt or investing.
Buying Too Much House
Buy a house. Live in it for 30 years. Sell the house for profit.
Sounds easy right? Well, this plan that you have been told usually isn’t as easy as it seems and many things have changed over the past 30 years.
House prices are at an all-time high. It has become extremely expensive to buy a home in the first place. If you are able to purchase a home, a lot of items have become much more expensive.
Being a homeowner comes with a ton of responsibility and a multitude of expenses. You have to consider the initial down payment and closing costs to get the house, but you also have to consider the monthly mortgage costs, utilities, and taxes.
You also have to factor in expenses that the mortgage and insurance don’t cover. Your home may eventually need a new roof, a new driveway, or other minor repairs.
You don’t want to end up in a situation where you are spending most of your money on your home expenses and barely have any income left for the rest of your endeavors.
Experts say that you should only be spending about 25-30% of your income on housing costs. If you are spending anywhere north of that number, you may find yourself in a bad financial situation down the road.
In addition to this, make sure you have an emergency fund just in case something happens.
If you’re in the market to purchase a home, you need to evaluate your situation and make sure you can afford it.
A big house is nice, but big doesn’t always mean better.
Everyone wastes money at some point, but a lot of people spend their money on things they do not need.
It is as simple as that.
We are fortunate to live in a country where we have access to a lot of different products, but this type of buying is often abused and ends up crippling people for years.
Many people purchase things because they are nice, or they are caught up in the moment, but a lot of the time these items or goods end up collecting dust and end up being another waste of money.
Unnecessary purchases tend to add up very quickly.
You take out your credit card and say you’ll pay it back later no problem, but that’s when the trouble usually starts.
You do not want to end up accumulating bad debt by buying things on a credit card.
If you can’t afford it, don’t buy it.
Act your wage.
You should also audit your streaming services and other memberships. Do you really need 5 different streaming services. Do you still use your gym membership?
Wasteful spending is a huge money mistake, so make sure you have a budget and know where your money is heading.
If you haven’t made a college decision yet then you may want to consider affordable options or routes other than college.
If you already have attended college and have student loans, then you may need to reevaluate your situation.
It is no secret that college is expensive, yet it seems like most parents and teachers push young kids to attend without realizing the consequences of graduation.
Yes, you get a degree, but in most cases, you also get a mountain of debt.
If you are looking into careers that require a college degree then you need to map out a path that will leave you with the least amount of debt as possible.
If you’re the average person who is not getting into the Ivy League or other ‘Top Schools’ then you should consider attending a community college or a state college. These schools usually have a much lower tuition price and offer the same degrees as private schools.
If you want to avoid college altogether, you can check out some of the best Blue-Collar jobs that offer high salaries after attending their trade schools.
If you have already graduated, then I recommend checking out the Student Loan Cheat Code.
This course will help you get organized, assess your situation, and help you earn more.
Investing is so important in building wealth.
If you are not putting your money in places to make more money then you are missing out on earning opportunities that will help you retire faster.
One of the best ways to build long term wealth is to contribute money monthly to a retirement account, such as a 401k or a Roth IRA.
You can also invest in other things, such as real estate, crypto, or a small business.
Due to inflation, your money actually loses value if you are not putting it to work.
Investing is absolutely necessary if you want your money to grow. By investing your money, you allow it to compound overtime and eventually set you up for retirement.
The early you start the better, so don’t make this money mistake by not investing.