10 Habits That Will Keep You From Getting Rich

Successful and wealthy people did not just suddenly become rich and successful (except for lottery winners). More so, keeping success and wealth is achieved not by accident but with discipline and proper money-habits. Self-made wealthy people build their success over plenty of years, and discipline.

We have compile ten spending habits that will prevent you from achieving your financial independence and success:

1. Impulse spending.

Going to the supermarket or the department store without a To-Buy list would most probably cause you to buy anything desirable you see in the stores. Spontaneous spending is a bad, tempting habit. This is a habit most of us is guilty of. So, plan your spending beforehand and stick with your spending plan.

2. Charging ordinary living expenses on a credit card.

Buying something above your means is a dangerous financial behavior. Why buy something ordinary that you cannot buy through cash? Credit cards are only good for large investment purchases (e.g. you bought a laptop and a mobile wifi so you could do your freelance work more anywhere you go) you could pay staggeredly. Credit card debt is the third cause of bankruptcy, other than job loss, and medical cost.

3. Spending more than 25% of your net income on housing costs.

Housing costs include rent, mortgage, real estate taxes, utilities, insurance, repairs, and maintenance.

4. Spending more than 15% of your net income on food.

This includes groceries and does not include prepared food. Prepared food is part of your entertainment budget. So, if you do not want to be bankrupt, and not to mention fat, mind how you spend money on groceries. Buying wholesale instead of retail purchases could save you a lot of money, so if you intend to buy some groceries, buy them in large amount or quantity.

5. Spending more than 10% of your net income on entertainment/gifts.

This category includes bars, restaurants, movies, music, books, gifts, etc. We understand you need a social life, but if it means risking your financial stability, you have to contain your social spending for you might not be able to socialise anymore once you go bankrupt. Also, eating out and any prepared food you purchase is part of your entertainment budget.

6. Spending more than 5% of your net income on car expenses.

Car expenses include a lease, loan, insurance, gas, tolls, registration fees, repairs, and maintenance. Avoid fancy car makeovers or upgrades which you do not actually need.

7. Spending more than 5% of your net income on vacations.

We all love to travel and chill, and break free from the depressing 8-hour daily work. But if you are planning a vacation which could potentially hurt your pocket, rethink it, it might not be a good idea.

8. Spending any money on gambling.

Gambling it tempting because if you are lucky enough, you could double, or even triple your bets. But gambling has caused many bankruptcy. If you want to double your profit or income, learn to invest in other profound and worthwhile activities.

9. Going over the top on gift-giving.

Gift-giving and “pasalubongs” is deeply entrenched in the Filipino culture. It is almost always customary that once you visit your relatives, you have to have something to give to your cousins, nephews and nieces, and siblings (even to your close friends). However, keep in mind, allot only 10% of your budget for gifts. Do not go overboard.

10. Spending more than 5% of your net income on clothing.

We understand that you have to look good all the time. But be practical. You can buy quality clothes at discounted prices. You do not have to buy expensive signature brands when there are equally high-quality substitute brands.

Your personal economy is the most important economy of all. Unstable personal finance might take its toll on you when unexpected expenses come your way (e.g. medical expenses, accidents, and economic depression). So, maintain a budget, stick with it, and track your expenses. Analyse your previous expenses and discern each spending whether it’s a necessary spending or an unwise spending. Unwise spending decisions should not be repeated.

Yes we know, getting control over our spending is not a walk-in-the-park task. However, once it becomes a habit, it will get much easier.

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