red sports car with a mansion in the background
red sports car with a mansion in the background
red sports car with a mansion in the background

NOTE: This article is part of what is now a discontinued category. Beginning January 2020, I will no longer be writing and publishing articles on Lifestyle and Finance categories. PHMILLENNIA is now a dedicated travel blog and as such, I will focus solely on creating content related to travel and adventure. Thank you for your understanding. 

4 Habits That Prevent You From Getting Rich

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Wealth, and the accumulation thereof, have long been a chief concern and occupation of humankind, the focus of unceasing attention, fascination, and indeed, frustration. After all, whether you agree or not, wealth is a form of power. Wealth can buy a life of comfort and convenience, a life of safety and security against many of the contingencies that would often bankrupt poorer people.

Throughout history, men and women have strived to achieve prosperity through various means. Many of the richest people have amassed their fortunes through talent, hard work, and no small amount of entrepreneurial shrewdness. Some have acquired theirs by way of luck, as those who have inherited their wealth or even won the lottery.

Though the vast majority of people have neither a huge inheritance to look forward to, nor a desire to gamble what little money they have on a game of chance, everyone wants to be rich.

And everyone can be rich – you included – except for the fact that you might be unwittingly creating your own barriers to financial success. The truth is, there are certain habits in your life that are preventing you from accumulating wealth and achieving financial independence. Here are four of them:

1. You spend too much

woman in a red coat holding multiple shopping bags in both hands (a reference to overspending as a habit preventing one from getting rich )
Spending more money than you can afford is a habit preventing you from getting rich || Photo by on Unsplash (edited)

If you have a habit of buying things you cannot even afford, or things that you do not even need; if you have a tendency to spend on a whim; if you never keep track of your expenses, and neglect budgeting; and if you live a lifestyle that is way beyond your income, then you might be guilty of habitual overspending.

You might think that overspending seems harmless enough, especially because you do it only from time to time.

So you walk into a store thinking of purchasing only one thing, but you end up leaving with twenty other items you did not even plan on buying – what of it? “It’s not like I do it every day,” you say.

A purchase here, another there – what could possibly go wrong? “It’s just that one time,” you say.

The thing is, overspending creeps up on you. While it might seem innocent enough at first, when left unchecked it can – and it will – spiral out of control and turn into an addiction with disastrous consequences.

The worst part is that you remain completely unaware of everything until you have already drained all your savings and racked up too much debt.

Overspending is almost always an addictive behavior arising from certain psychological issues. For instance, many overspend in order to relieve anxiety and agitation, such as those who indulge in binge shopping when they are stressed.

Others overspend to compensate for the needs and wants that were never satisfied earlier in their lives, like those who buy things they lacked in their childhood.

Some overspend in a bid to impress their friends, colleagues, or just about anyone and everyone around them.

Still others overspend on holidays or special occasions because they believe that the very nature of such moments completely justifies extravagance, like those who splurge on Christmas because “oh what the heck, it’s Christmas anyway.”

Besides, easier access to credit sources, such as credit cards, have made it less difficult for erstwhile non-overspenders to fall into the habit of overspending, and for habitual overspenders to perpetuate their unsustainable behavior.

You see, when you pay with cash, you are very – and painfully – aware of how much you are actually parting with. In behavorial economics this is known as the “pain of paying”. With credit cards, however, such pain is thought to be reduced, and even separated from the pleasure of buying.

But if you are absolutely serious on getting rich, then you need to rein in spending. You need to know full well where all your money is going. For this you need to create a budget, one that is reasonable and sustainable, one that you can actually live by.

Your budget will help you keep track of your expenses. It must include even the smallest and seemingly unimportant expenses, since these are the ones that are often overlooked and thus tend to slowly and steadily accumulate without your knowing. Having a receipt for most, if not all, of your purchases should help you out immensely.

Savings, fixed expenses, and essential needs must take priority in your budget, and not as an afterthought. Once you have all these sorted out, then and only then should you think of spending on non-essential expenses such as entertainment, leisure, etc.

It is crucial that you minimize your credit card usage. Consider using cash for budgeting by setting a limited amount of cash for most of your expenditures. Once the cash is gone, well, it’s gone.

You especially need to stop spending upon impulse. Plan ahead before shopping. Write down the things you have to buy and how much budget you allot for each. Make sure that you allow yourself sufficient time to think over your purchases before making the move. Before adding an item to your cart, ask yourself if you really need it. If you cannot find a good reason, then put it back.

Ditto for shopping online. Before paying for the items you have added to your shopping cart, give yourself a day to think over your purchases. You might be surprised by how many of these items you are suddenly uninterested in buying on the following day.




2. You save too little

Hands holding an empty wallet
Neglecting saving is a habit preventing you from getting rich || Photo by Andrew Khoroshavin on Pixabay (edited)

Saving is crucial to accumulating wealth; it is one of the first and most critical steps to achieving financial success. While it is very unlikely that you will get rich through saving alone, if you neglect saving, then you might as well give up on your dreams of prosperity.

Saving essentially means setting aside part of your income for future use. After all, you can never predict the future. You can only prepare for it. Saving allows you a certain measure of financial security by providing you a safety net for emergencies that necessitate spending. That way, you do not have to resort to debt.

Imagine needing a new roof for your house, or needing repairs for your car, but you will not be receiving your paycheck until the week after next.

Imagine falling ill all of a sudden, but your insurance will not cover your medical costs.

Imagine losing your job – your only source of income – one day, and you know it will take you weeks, maybe even months, to find another job.

Saving helps you prepare for just such contingencies.

Saving also entails living a lifestyle below your means. That means keeping costs down as much as possible, and living as frugally as is allowable.

Of course, that does not sound very exciting at all. That might even seem contrary to all your preconceived notions of what being rich is supposed to be. Grand mansions, luxurious cars, lavish parties, expensive vacations, and whatnots – these are common images that come to mind whenever most people think of wealth. But remember, most people are not rich.

Regrettably, the vast majority of people do not believe in the virtues of a frugal life. They think it is overrated, or even obsolete. They even mistake it for deprivation.

However, thrift is a key part of financial independence. You need to understand that it does not matter how much you earn, if in the end you spend it all anyway.

Amassing wealth necessitates that you continually widen the difference between what you earn and what you spend. That means constantly increasing your income while at the same time continuously decreasing your spending, so that you have an ever growing surplus of money that you can then save and invest.

That also means forgoing the fancy and the flashy in favor of the frugal. It does sound incredibly boring, but it is exceedingly effective, and that is what matters.

So if you are absolutely serious on getting rich, you need to start saving. And it will be a lot helpful if you have a specific goal or purpose for the money you are saving. You can begin with an emergency fund to help secure yourself against financial contingencies, be it illness, loss of income, or whatever. Ideally, your emergency fund should be worth enough to cover at least several months of your expenses.

From there, you can decide what other worthwhile goals to save for. Short-term goals include saving for a new smartphone, a car, or vacations. Long-term goals include saving for a mortgage deposit, your child’s college education, or retirement.

You might not be able to save for everything you want, so always be mindful of what goals need to take priority.

You need to make saving first, and you need to make saving automatic. Most people would rather spend most of their money first, and then save only what is left. The problem with that is more often than not, there is nothing left to save.

Instead, make sure that saving is among the first priorities in your budget. Set aside a fixed amount or percentage of your income and transfer it immediately to your savings accounts – emergency fund, retirement plan, and otherwise – before spending the rest. Make this process automatic.

Keep in mind that there are different types of savings vehicles, and you need to choose according to your financial goals. A regular savings account for your emergency fund should help you get started, but do not expect to earn much – most regular savings accounts hardly pay any interest.

If you are looking to earn more from higher interest rates, consider putting your money in high-yield savings accounts, term deposits or Certificates of Deposit (CDs), etc.

Remember to save any and all windfall gains, such as bonus payments, income tax refunds, and even lottery winnings. Even collecting loose change and adding it to your savings would be helpful.

Adopt a frugal lifestyle. Cultivate thrift. Reduce expenses that you do not really need to be paying. Do you still need that magazine subscription? What about your cable television? Maybe you can switch to a cheaper mobile plan that offers exactly the same services? Wherever possible, cut costs that do not really matter.

Avoid impulse buying. Shop around and compare the costs of major purchases before making the move. Consider purchasing cheaper and generic brands without, of course, sacrificing quality. Use coupons. Shop at sales. Remember that the more money you save, the more you have for investing.




3. You don’t invest

Dollar bills planted on soil
Third habit preventing you from getting rich – you don’t invest || Photo by TheDigitalWay on Pixabay (edited)

So you are saving a lot of money by cutting back on costs and practicing thrift. But if all you do with your surplus money is stash it beneath your pillow, then you might as well give up on your dreams of prosperity. You will never get rich, no matter how much money you tuck away underneath how many pillows. Inflation alone will take a toll on your precious savings.

Reining in spending and adopting frugality are only half of the equation. The truth is, it matters less how much surplus of money you have saved. What matters more is what you actually do with it. You need to understand how to make your money grow.

Sure, the underside of your pillow might be the safest place in the world. But if you are absolutely serious on getting rich, then you need to think beyond safety and start taking risks – calculated risks that is. You need to start investing.

Investing is an unrivalled tool for building wealth. Warren Buffet, widely renowned as one of the greatest investors in history, amassed his multibillion dollar fortune largely through investing. George Soros is another successful investor, as well as John Templeton, John Bogle, and William Gross, among others.

Investing involves committing money or capital into a venture or a vehicle in the expectation of gaining some profit or other benefit in the future. Put simply, investing is lending your money out to an individual or an institution in the hopes of making even more money. It’s really all about making your money work for you.

Your aim in investing is to make your money grow by purchasing assets that might generate income for you, and/or increase in value in the long run. You may earn dividends from investing in stocks, interest from bonds, or even rent from real property you lease out. Over time, your investments that have grown in value can then be sold at a profit.

Unlike saving, investing always involves risk. There is no guarantee of a return. You may lose some or even all of the money you invested. But the greater risk is offset by the possibility of greater earnings. As a general rule, the more risk there is to an investment, the higher the potential return, and the higher also is the possibility of loss.

While it is true that there is no guarantee of financial gain from investing, putting in some effort on your part can improve your odds of success. To temper the inherent danger of investing and actually turn a profit, mastering the principles of risk management is key.

There are numerous types of investment vehicles. Stocks, though risky, offer greater potential earnings. Bonds are widely seen as safer investments, but their value is heavily affected by interest rates. Mutual funds proffer higher potential reward than many low-risk investments. Real property and real estate investment trusts (REITs) can be risky, but has the potential to appreciate in value over time.

Understanding how different types of investments work is critical to your success. Know what investment vehicles are best suited to your financial goals. Before you invest, devote sufficient time to thoroughly analyze and research on the advantages and disadvantages of each type. Even just reading up on investing can help.

While investing is all about growing your money, you must invest cautiously. As the old adage goes, do not put all your eggs in one basket. In finance that means you need to diversify your portfolio. To help minimize potential loss, spread your money across different types of investments. In the event that one of your investments incurs a loss, your other investments could help offset it by earning you a positive or higher return.

You need to invest early, and you need to invest now. Remember that successful investing takes full advantage of the power of compounding. Put simply, compounding is reinvesting an asset’s previous earnings to generate even more earnings.

Compounding relies on two things: reinvested earnings, and time. The more time you allow your investment, the more you are able to accelerate your potential income. So starting as early as possible is not only wise, it is crucial.

4. You don’t earn enough

Man in suit handing out several hundred dollar bills (a reference to not earning enough as habit preventing one from getting rich)
Fourth habit preventing you from getting rich – you don’t earn enough || Photo by Steven Millstein on CreditRepairExpert (edited)

So you are not an overspender. In fact, you are quite the opposite. You live by a reasonable budget. You do your utmost to prioritize fixed expenses. You even try to reduce costs wherever possible.

You are already without cable TV. You have canceled your Netflix subscription. You work out at home because you have given up your gym membership. You ride public transportation instead of your own car. You never even eat out anymore.

But somehow, you still find yourself constantly worrying about your finances. You still struggle to make ends meet. You still run short of cash way before your next paycheck. And despite your very best attempt at budgeting, you cannot find any other cost to cut back on.

Face it. You are just not making enough money.

Your frugal habits and thrifty lifestyle are commendable. Unfortunately, they are not enough to get you where you dream to be. Saving is crucial to building wealth, but you do not want to become so fixated on saving alone that you neglect what is even more important – increasing your earnings.

Stop worrying about running out of money. Focus instead on how to make more. If you are absolutely serious on getting rich, you need to devote more time and effort on building multiple streams of income.

As already mentioned, investing is one exceptional way to augment your earnings. Dividends from stocks, interest from bonds, rent from property you lease out, and otherwise are all excellent sources of passive income.

But there are still numerous other ways of raising your revenues.

Start with your job. Are you earning the salary that is actually commensurate to your skills, performance, and experience? If you are being paid less than your peers in the same line of work, then it is time to take action.

Why not try asking for a raise? Or perhaps a promotion? Of course, this sounds easier said than done. Asking for a raise or promotion is almost always a daunting prospect. It never really makes for a comfortable conversation. And it could be disastrous for you if you handle it without tact and prudence.

But if you are absolutely and irrevocably certain that you are deserving of a raise or a promotion, then you need not feel too apprehensive. Before broaching the subject to your boss or supervisor, make sure you have a realistic, organized, and well-researched argument to support your request. Remember to treat this matter with all the consideration, courtesy, and even charm that you can muster.

Or maybe it is time to quit your job and find another that actually puts a higher value on what you bring to the company. Think about it.

There are more ways to make more money outside of your nine-to-five. Consider taking up a part-time job, or engaging in paying gigs and side hustles. Why not offer your freelance services online?

There are plenty of websites where you can take up freelance projects for extra cash. Although the compensation for each gig is often minimal, it is offset by the fact that you can take as many gigs as you can handle. Plus, most gigs allow you the freedom to work on your own time and your own place.

Writing, tutoring, graphic design, mobile app development, and even babysitting, dog walking, and housecleaning – you must have at least one passion that you can turn profitable, right? Those paintings you have been working on during your free hours might sell for a good price. Or those photographs that you have been passionately capturing and painstakingly editing and collating.

Sell whatever you can. Rummage through your closets, attic, or basement for stuff that you have no need for anymore but that might still fetch a decent amount of cash. Then host a garage sale. Or better yet you can post your stuff online on eBay, Craigslist, or elsewhere.

You can even rent out your stuff and make money. Rent out your room on Airbnb. Or rent out your car, boat, bicycle, parking spot, camera, clothing, and literally anything and everything.

Or maybe it is time you find out if you really have that entrepreneurial spirit in you. Why not start your own business?

Many of the world’s largest companies – Apple, Amazon, Alphabet (parent company of Google), Microsoft, Facebook, and Alibaba, to name a few – were begun by lone or a handful of entrepreneurs who had a dream and dared to follow it.

Now many of these entrepreneurs – Jeff Bezos, Bill Gates, Mark Zuckerberg, etc. – top the list of the world’s richest people.

That business idea of yours that you have been wanting to start for years now might actually turn out to be your ticket to prosperity. Wouldn’t you want to find out?

Remember, it is not enough that you work hard. You need to work smart, too. If you think that the only way to make more money is to work more hours, then you will never earn a fortune.

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Hi. I’m Jared Jeric dela Cruz, the creator and author of this travel blog. I am an ardent dreamer, an aspiring adventurer, and a passionate storyteller

PHMILLENNIA is a travel blog lovingly crafted and nurtured to bring you  travel information, insight, and inspiration.

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