These 7 Money Habits Keep You Stuck

What money habits do you have right now that are keeping you from building wealth? You see, a lot of living a rich life boils down to your money psychology and what you believe about money. And you're going to be amazed at how fast your financial life can change once you change your mindsets and your money behavior. So in this video, I'm going to break down the seven most common money habits holding you back and what to do instead. Starting with bad habit number one. Ignoring money. This is one of the worst financial decisions you can make. And I'm not exaggerating because most of us ignore the critical fires happening in our financial life. Whether it's ignoring your credit card debt or simply not investing because you're waiting for someday to start investing. Inaction is costing you dearly and someday will not lead to your rich life. For example, if you have credit card debt, my wish for you is that you create a debt payoff plan so you know the exact month and year that your debt will be gone. It feels so good to know. Even if it's three years or 30 years, it feels so good to know exactly when there's going to be a light at the end of the tunnel. Remember, Most credit cards charge 22, 26, even 28% interest rates, so paying off these credit cards aggressively, even with an extra hundred dollars a month, can shave off months, sometimes years of your debt. And it's not just credit card debt, it's also investing. My wish for you is that you take 5 to 10% of your income minimum and set up automatic investing. That is where true wealth is created. And too many of us focus on cutting back on $5 coffees while ignoring how much we could be making by investing. So whatever you do, please do not put your head in the sand and ignore your if you're watching this video, that's already a step in the right direction. So let's move on to bad habit number two, asking $3 questions, not $30,000 ones. I see so many people who are stressed about money and their reaction is to try to cut back a little bit in every single area of life, they follow this financial advice. Cut back on your lattes. Cut back on the amount of lettuce you buy. Cut back on how many rubber bands you buy. It's a horrible way to live and it actually does not really change your finances whatsoever over the long term. If this sounds like you, if you are obsessed and agonized over $3 questions, there is a better way. I want you to focus on the areas that will make you the biggest impact. What I call the big wins. And there are a few big wins in life where if you simply get those right, you almost never have to worry about the small things. Those five to 10 big wins are worth way more than all the next 50 little things you can do. So what are the big wins in your financial life? Well, first, investment fees. A lot of people have a financial advisor and they don't even know how much that advisor costs. If your advisor is charging you 1% AUM, or assets under management, that means that you're losing about 28% of your lifetime returns in fees. That is a lot of money. Tens of thousands of dollars, sometimes hundreds of thousands of dollars. So investment fees are one area where you can achieve a big win. Next up, negotiating your salary. A lot of people simply take what's given to them. They never negotiate. Now, if you negotiate one single $5,000 raise in your 20s, that can be worth hundreds of thousands of dollars over your lifetime. But that can be true in your 30s, 40s, and beyond. You can take part of that money and invest it. You can take the rest of it and spend it on something you love. My point to you is I want you to stop thinking about $3 questions and really start thinking about $30,000 questions. These are the questions, like paying off your debt aggressively, that pay huge. And once you get those right, you never need to worry about $3 questions anymore. Next up, bad habit number three, playing defense with your money. I get emails from people who are worried about what the Fed is going to do. Is my investment going to return 7% or 7.1%? What do you think about? I go, you can't control this, so why are you worrying about it? And what's even worse, because they spend time worrying about things that are uncontrollable. They neglect things that they actually can influence. One of the major red flags I see from warriors is is they log into their accounts daily. Oh, I need to check, make sure my bills got paid. Oh, did this happen? What about that? What's the market say to Fed? What do you say? Stop it. I don't even have financial apps on my phone. And you shouldn't either. What reason is there to be logging into your accounts every day? If you set your money up automatically, you don't need to do that. What this tells me, if someone has an app they log into every day, is number one, they don't feel in control their money. Number two, they don't have a financial system in place. And. And number Three, Most importantly, they are obsessed with the minutia. They're playing small and they're playing defense with their money. To tell you the blunt truth, checking your bills every single day is not going to lead to your rich life that is too small for you to be focusing on. And frankly, a computer can do that better than you ever could. And I simply reject the premise that money is something you should feel bad about or stressed about every single day. That's not the point of money. Yes, you should save and invest and pay off your debt, but yes, you should also use your money to live a rich life today guilt free. And to do that, you have to play offense with your money. When you have a proper financial system, there is no reason to log into your accounts daily. Which brings me to bad habit number four, following invisible scripts. Invisible scripts are beliefs that are so deeply embedded in us that we don't even realize they guide our attitude or behaviors. And over time, these scripts can become dangerous psychological traps that hold us back. Let me show you an example of an invisible script. In America, you should buy a house because you're throwing money away on rent. That's an invisible script. We grow up hearing it from everyone. Movies, TV shows. And we start to believe it over time. Is it true? Maybe, maybe not. On my podcast, I'll ask couples, what do you remember your family saying about money when you grew up? And you know, one of the most common things they say their parents told them? We can't afford it. Now. Think of it fast forward 30 years later. You get a great job, you start investing money, and you cannot figure out why you still feel so guilty about buying a coffee. Now, most people never make the connection between what they grew up with and how they feel about money decades later. That's why I call them invisible scripts. So the next time you have a negative reaction to money, write down your money belief, acknowledge them, even interrogate your own beliefs. Why do I believe this? What if I did the opposite? Who do I admire? How would they think about this and then decide what scripts do I want to follow and what scripts do I want to reinvent for the next chapter of my life? By the way, here are a couple of other common invisible scripts that many people grew up with. We don't talk about money. Well, how can you expect to get ahead if you're not actually talking about money? What's really going on with this invisible script is that people think money is a source of stress, overwhelm, guilt and anxiety, so they want to deny talking about it. Well, I don't. I think money is a source of adventure and spontaneity and possibility. Of course I want to talk about it. Yes, I want to build some skills and learn how to set my accounts up and invest. But of course I want to talk about money. It's what helps me live my rich life. Next. Investing is only for rich people, not people like us. Wrong. The way that you get wealthy is by investing. This is so common, especially with people who were never exposed to investing. And it drives me crazy because I want everybody to have access to the greatest wealth creator in history, the stock market. So even if you've got an entry level income, even if you can only invest $20 a month, it's still meaningful. And that is how you get started. So you can literally change your life by spending one day setting up automatic investments. That means you can start to actually live your rich life and not worry about money for the next 20 years. Next up, bad habit number five, having generic goals. You know, when I ask people, what is your rich life? 90% of the people have the same answer. They go like this, I want to do what I want when I want. And then they just wait. They wait for me to applaud. Oh my God. Did you say you want to do what you want when. When you want? That's so original. And then I go like this, what do you want? They never thought about it. They spend 50 years working eight plus hours a day, agonizing over money, feeling guilty over money, thinking about money. And I go, what do you want to do? What's the point of all this? Why are you spending your entire life working to accumulate money and save money and spend money, and you never even sat down to answer a single question, what do you want to do with your money? Nobody trips and falls into a rich life. If you want to live your rich life, which is going to be different than mine and everyone else's, you have to design it. Okay? Other common goals I see people make time and time again. I want to get healthy means nothing. I want to pay off my debt means nothing. Because you didn't tell me how much and when and the exact month and year it will be paid off. I want to find a new job, okay? I want to fly. Just saying it doesn't make it happen. Let me break it down for you. Setting generic goals can actually be worse than not setting a goal at all. Because people go through the effort of saying, I want to get healthy. And then of course, inevitably, life gets in the way and they don't get healthy. They don't even know what healthy actually means. And then they beat themselves up. Well, I set this goal and I never fall through. And now I don't trust myself better. You didn't even set that at all. Instead of saying I want to get healthy, I want you to get specific about exactly what you want to do, when you want to do it, who you want to do it with, and then you can control that part of the process. So how do you create better goals? Well, you can use smart goals. Smart goals are specific. What will my goal achieve? Measurable. What does success look like? Attainable. Are there resources I need, such as the courses@iwt.com that we offer? Relevant. Do I really want to do this? And time oriented. What is the deadline? Let me give you a few examples. A terrible goal. I need to get better with money. A bad goal. I want to save $1,000 this year. A smart goal. I want to have $40 per paycheck automatically transferred to my vacation sub savings account for one year. That's how you do it. Do the work upfront to define what success looks like. And if you aren't sure if honestly guess, just write it down and then course correct over the next month or six months. Which brings me to bad habit number six. Spending without a plan. You know how many people go through life feeling like spending money is a bad thing? They even say I should be good this month, which to them means they aren't spending money because spending money is bad. On one hand, we are very puritanical about money. We're told not not to buy lattes, not to buy jeans, not to buy handbags because they're frivolous. Funny, you never hear someone describing an $80,000 truck as frivolous. But a $2,000 handbag? So frivolous. And we do this for our entire life. On the other hand, we see our friends in Bora Bora on Wednesday on Instagram. We're like, how come they get to do that and we don't? What if spending money actually felt good? Good. My dream for you is to have a vision for spending money on the things you love. And once you do, then you can cut costs mercilessly on the things you don't. The challenge is that many of us have never articulated what we love spending on. We feel guilty to even say it out loud. I'll ask people, what's your rich life? What's your dream? They go, oh, I guess one day I'd like to have a beach house. I mean it doesn't even have to have a roof. It doesn't have to have walls, no windows. It doesn't even have to have a door. I just need to be within five miles of the beach. I go, what the. I just asked you your rich life and you just minimized everything. So now you're living in a shack. What kind of answer is that? And it's not that they're a bad person. It's that we have been taught to play small. Now, I don't know about you, but I don't want to play small. And I don't want to wait until I'm 90 to finally enjoy my money. I want to live a rich life today and a richer life tomorrow. Here's what you do. You gotta know your numbers using my conscious spending plan template, which you can download right here. Then you prioritize what you want to spend more money on. Now, you can't predict everything. That's life. But knowing your numbers will allow you to build in some flexibility into your life. You'll be able to handle the unexpected expenses that life inevitably throws your way. If you only track the four numbers in my conscious spending plan, then when things come up unexpectedly, you won't be thrown off financially. The CSP has four major buckets on where your money goes. First is fixed costs. Your fixed cost should be no more than 50 to 60% of your take home pay. Otherwise you're going to feel constantly stressed out about money. Next, your investments. I Recommend at least 10% of your take home pay. Of course, the more the better because this is where real wealth is created. Next, your Savings. This is 5 to 10% of your take home pay. Minimum. This. This is for an emergency fund and expenses that you're going to have in roughly one to three years. And finally, my favorite one of all, guilt free spending. Now that should be between 20 to 35% of your take home pay. I know what you're thinking. That's a lot. Yes it is. This is your fun money for anything you want to spend on this month. Could be eating out, throwing a party, taking a trip, treating your spouse or family. Don't get too stuck thinking what goes where or if your numbers are exact. My suggestion? Estimate it, implement the plan and you can adjust as needed. Now, if you follow the conscious spending plan, you're going to be saving automatically every month, investing automatically every month, and best of all, spending money with intention. All right, I have one more money habit left. But before we get to that, if you're not already subscribed to my channel. Go ahead and do that for me really quick. And now Bad Habit Number seven Having a scarcity Mindset have you ever said one of these phrases? I'm never going to be able to afford that. That's a waste of money. I don't need to spend on things like that. If you've said any of those phrases, you may find it difficult to spend money on yourself, and if so, a good place to start is to look at your numbers to know why you are feeling that way. Sometimes you're right. If you have a huge amount of credit card debt, you probably shouldn't be staying at an ultra luxury hotel if your fixed costs exceed 60% of your take home pay. Yeah, you probably cannot afford that new car. Okay, but in other cases it's a scarcity mindset. And I've spoken to people who have millions of dollars in the bank and they can't bring themselves to buy blueberries or take a trip that their spouse has wanted to take for decades. That that holds you back. I would challenge you to adopt a growth mentality to use money to live a rich life. Because the point of money is not to hoard it and save it, it's to use it for your rich life. Now that we've gone through the seven most common money habits keeping people stuck, I hope you're able to identify which habits are keeping you stuck. And better yet, you know exactly how to change these into positive habits. Check out this video popping up on screen to watch more.