You don’t have to be born into a rich family or win the lottery to accumulate wealth and enjoy a comfortable lifestyle. But you have to be disciplined and understand what it takes to get ahead financially, not to mention avoiding the pitfalls that could be holding you back.
Here are eight things that may be preventing you from achieving your dream of wealth and prosperity.
1.You spend more than you make
Wealthy people live within their means. If you’re spending more than you make, it’s nearly impossible to save money. Make a budget that’s ideal for your income range and financial situation and stick to it. Don’t overspend on extravagant items that you simply can’t afford unless you put them on credit. Also, forget about keeping up with the Joneses (it’s one of our deadly money sins).
2.You don’t negotiate your salary
While negotiating salary may be a bit uncomfortable, not getting paid what you’re worth could take you off the path of becoming rich. Before accepting a job or asking for a raise, do research to find out how much others in your area and position are being paid. Remember that the worst an employer can say is “no.”
3.You’re not investing
Investing is an important wealth-building strategy that you shouldn’t overlook. Set aside a little money at the end of each month to invest in things like stocks and bonds. The earlier you start investing, the more likely you are to benefit in the long run as time and compounding interest will be on your side.
Not sure where to start? We have a guide here.
4.You have too much debt
It can be difficult to build wealth when you’re spending most of your money on debt payments. Do your best to get rid of student loans, personal loans, car loans and even your mortgage so you can enjoy a debt-free lifestyle and actually keep and invest the money you make. Consider the debt snowball or debt avalanche method to help you get out of debt.
Here’s our guide to getting out of debt in 30 days or less.
5.You don’t focus on retirement
The longer you wait to save for retirement, the more difficult it will be to accumulate a large nest egg to retire by 65 (or even earlier). If you want to have enough money to retire, contribute to your employer sponsored 401k plan. If you’re self employed, consider an independent retirement account.
6.You live paycheck to paycheck
Nearly 80% of American workers live paycheck to paycheck, according to a study by CareerBuilder. If this is you, becoming rich may be nearly impossible. To break the paycheck to paycheck cycle, create and follow an effective budget, reduce your spending and get out of debt. Make sure you set aside some money each month for saving and investing.
You can get started using this downloadable budgeting spreadsheet.
7.You don’t have an emergency fund
An emergency can happen when you least expect it. Your car may break down, your roof may need to be replaced, or your spouse may lose their job. If you have an emergency fund, you won’t have to go into debt to pay for these unexpected expenses. A good rule of thumb to save up for is three-to-six months of expenses.
8.You have a negative mindset on money
If you believe you’ll never be rich, you won’t. The key to succeeding financially is believing in yourself and what you can accomplish. No matter your current financial situation, you can still build wealth and enjoy a comfortable lifestyle.
Ready to get started? Here are 50 ways to your first million.
Image: Aaron Sollner