5 Money Mistakes that are Keeping You from Becoming Rich
Becoming a millionaire is becoming increasingly difficult in today’s economy. According to a survey, the United States has around 10.8 million millionaires – and having just one million dollars in your bank account simply isn’t enough to be considered ‘rich’ in the U.S.
So how much money do you need to have in order to be wealthy? 2017’s Charles Swab study answers: $2.4 million – 30 times more than the net worth of an average American. Most people will never come near that number if they don’t know how to handle money. But if you want to join the ranks of the millionaires despite having an average salary, avoid these five money mistakes that are preventing you from building real wealth.
You Are Spending All Your Bonuses
Everybody wants a raise because of the excuse that they want to save, but when they do get one, they start splashing out on things that they don’t really need – especially during the holiday season. Survey shows that the average American spends 90% of their income even after getting a raise or bonus. Most of the extra money goes into buying expensive things like cars, homes which often result in loans that take years to pay off.
But if you’re a big spender but not a big saver then prepare yourself to live the rest of your life with an average net worth. People who know how to invest every extra dollar that they get are the ones who successfully multiply their wealth to become millionaires. Instead of spending your raise on things you don’t necessarily need, bump up the contributions for your 401(K) plan so that your money can grow exponentially over time.
You are Paying Interest on Bad Debts
Most people in America have a negative net worth due to the amount of debt they have accrued. If only we had enough common sense to know the difference between appreciating and depreciating assets, we wouldn’t have to pay such large amounts of monthly interests on loans.
Student loans and mortgages are considered as good debt since education is an appreciating asset which eventually results in high paying jobs – so is your dream home. On the other hand, car loan is considered bad debt since it is a depreciating asset which goes down in value with time and accumulates a large amount of interest payments.
You Don’t Have a Plan for Retirement
If you’re relying solely on your social security to keep you afloat after retirement, then you’re making a big mistake in terms of saving for the future. The problem with social security is that that the average benefit that you will get after retirement is far too less to enjoy a happy, fulfilling life. Study shows that four out of ten future retirees plan to live on social security which will put them below the poverty line and leave no disposable income to cover other cost associated with healthcare.
You’re Starting Late with Retirement Savings
If you want to save more, you must start early – it’s that simple. Most people in America aren’t as rich as they wish they were because they don’t start saving or investing early enough. While it’s possible to save a considerable amount of money for retirement, if you start around the age of 40, it won’t be nearly enough to turn you into a millionaire after retirement. The benefit of saving from an early age is that you won’t have to put away too much money in order to live a luxurious life after retirement.
You Aren’t Smart About Investing
You don’t have to know everything about the stock market in order to make smart investment decisions. But what you do need to know is which 401(k) plan you need to invest in for maximum returns. Apart from the retirement plan, you can invest in mutual funds or maintain your own stock portfolio depending on your investment knowledge.
More in Loans & Mortgages
-
WWE Signs $1.4 Billion Broadcasting Contract for SmackDown
In an explosive turn of events, World Wrestling Entertainment (WWE) has just unleashed some earth-shattering news for its legions of fans....
November 9, 2023 -
Navigating the Mortgage Maze as Interest Rates Take a Historic Leap
The U.S. housing market is nothing short of a dynamic entity. It evolves, reacts, and sometimes, just like the current real-estate...
November 3, 2023 -
Celebrity Couples Where the Woman Has a Higher Net Worth
In a world where gender roles and financial dynamics constantly shift, it’s not unusual to find celebrity couples where the woman...
October 27, 2023 -
Why the Gender Pay Gap Could Be Worsening
Picture this: Two college students, Alex and Charlie. Both are bright, have the same interests, and are ready to embrace the...
October 19, 2023 -
JC Penney’s Remarkable $1 Billion Revival Plan
In a remarkable turnaround, JC Penney unveiled a bold $1 billion revival plan, breathing new life into a brand that faced...
October 12, 2023 -
Shattering the American Dream: Mortgage Rates, Inflation & Cost of Living
You know that feeling when you are dreaming of something you have wanted for so long, only to watch it vanish...
October 6, 2023 -
Navigating the Workplace Dynamics With Generation Z
With the entry of Generation Z (born from 1997 onwards) into the workforce, a fresh breeze has swept through office spaces....
September 22, 2023 -
Why Businesses No Longer Offer Perks and Freebies
Have you noticed a shift in how companies are doling out customer perks and rewards? It’s not just your imagination—there’s a...
September 15, 2023 -
Paying Off Your Debt Through a Home Equity Loan | Is It a Good Idea?
Debt can be overwhelming, and finding ways to pay it off can be difficult. One solution that many homeowners consider is...
September 7, 2023
You must be logged in to post a comment Login