Thursday, November 16, 2017
10 Wealth Killers
We all want to be wealthy, well most of us anyway. The basics of becoming wealthy are fairly known, but just in case you don’t know, check out my post earlier from this week. Anyways, saving money, investing it, making smart decisions and patience all go into being wealthy. What many of us don’t know is the things that could kill our chances of being wealthy. There are things we do every day that if they become habits, will lead to us never being wealthy. Remember I said it is in all of us to be rich, it is just a matter of what we do with our money. Today, I am going to discuss 10 Wealth Killers and explain why doing them could hurt your chances of ever being wealthy. Let’s get started.
1) No Emergency Fund
I cannot stress enough how important an Emergency Fund is. It is so important that Dave Ramsey dedicates steps 1 and 3 to it in his 7 Baby Steps to Financial Freedom. You must be able to weather the small storms in life. For instance, this month I had to buy a new computer because my work decided that they are taking all their computers back. Boom, $1500 down the toilet, just kidding I love this computer. Needless to say, that’s $1500 I do not have lying around. Oh, wait yes I do! It’s in my bank account in case stupid stuff like having to buy a computer unexpectedly comes up. I need it for work, it’s an emergency. The same counts for water heaters, car problems, vet bills and don’t get me started on kids! Dave Ramsey says to start off small saving $1000 for a mini emergency fund and then gravitate to 3-6 months. I think you should be constantly adding to your emergency fund. I even dedicated a whole week to it!
Starting an Emergency Fund: My Five Step Process – Budget Boss
2) Not Staying Invested
Did you know the Dow Jones is down over the past week? Oh, snap! The TSX and Nasdaq are as well. We all better run for the hills. Wrong! Jumping from the market every time you have a hunch will cost you huge. The point of investing money is staying invested. That means not freaking out every time the market goes down. Don’t believe it will cost you? Check this out:
Crisis: Korean War (June 1950)
Value Lost (S&P 500) -15% in 5 Weeks
Change after 6 Months: +31%
Time to return to former value: 3 months
Crisis: Terrorist Attacks (Sept. 11, 2001)
Value Lost (S&P 500) -12% in 1 week
Change after 6 Months: +19%
Time to return to former value: 2 months
Crisis: US Financial Crisis and Bailout (Sept. 2008)
Value Lost (S&P 500) -36% in 10 Weeks
Change after 6 months: +11%
Time to return to former value: 27 months
Even the disastrous 2008 crisis returned to normal. If you jumped from the market during those down times you would miss out on buying on the cheap and would not take advantage of the recovery. You have to stay invested and not let emotions rule you. I know it’s tough because it’s your money, but understand there will be rough patches.
Market Downturns and Subsequent Recoveries – Capital Asset Managment
3) No Health Insurance
You must have some form of health coverage whether it’s through your work or on your own. Expensive medication, treatment, or dental procedures can destroy your bank balance. Some people think just because they are healthy that they don’t need it. Uhhhh, that’s when you buy insurance; when you are healthy. No one will insure you when you are sick. If you have no coverage and no emergency fund you are euchred. Do not pass go, do not collect $200, you will be sunk. Look to jobs with medical coverage or get your own. My medication bill is 50K and I look healthier than most. You won’t know what you need until you need it. So get on it!
4) Disability Coverage
Just like Health Insurance, covering against disability is a must. There is nothing that will crush your dreams more than a disability. Don’t think it’s true? Go down to the local mission and ask each person about their health status. Disability and illness crush your paycheck. The government isn’t of much help either. In my own life, the sicker I was, the more broke I was. It’s simple and heartbreaking. Take the steps to get covered either through work or on your own. Disability and Critical Illness insurance are not that expensive, and you can even get your money back if you don’t get sick. Bonus! It could be the difference between retiring with dignity and not, so look into it.
5) Bad Friends
You get to a certain age and some people have to go, it’s just a fact. Friends that drag you down or are constantly doing things that cost you money are not meant to be in your life. I gain more enjoyment these days out of a cup of coffee and a book than a shot of vodka and a DJ, I’m lame I know. If you have destructive friends, release them into the wild. If you are the destructive friend, look to straighten out. Being a mess after 30 isn’t cute anymore.
6) Financial Ignorance
You know that thing on your phone that makes it so fancy, it’s called the internet. Everything you could want to know about personal finance is on their, including yours truly. There is no excuse anymore to not know the basics of personal finance. It is all out there for you to take, so go after it. People used to have to go to libraries and read outdated books to learn about finance. Now you get articles sent to your phone daily by amazing people like me. Take some time to learn the basics, you will be richer for it.
7) Poor Mentality
Your money mentality will dictate much of your life. How you feel about money, how you react to crisis, and how you feel about debt. You should feel like debt sucks and is gross. You should want to make as much money as possible. You should be a saver and not a spender. If you have these mentalities, then you will go far. It is all in your mind and every challenge you face can be overcome. Being wealthy is no different.
The Biggest Waste of Money there Is – Budget Boss
8) Get Rich Quick Schemes
There is no way to get rich quick other than luck. Some people have all the luck and it always works out. For the rest of us, we have to plan, work hard and make the right choices. More people get burnt on “get rich quick schemes” than get rich quick. The reason it rarely works out is that if it always worked, everyone would do it and then money would have no value because everyone has it. If there are some get rich quick schemes out there that work, we don’t know about them. If you had a scheme that worked would you tell anyone else? I wouldn’t either. Stick to the fundamentals. They might be boring, but they work.
You are never going to get rich quick. Ever. – The Medium
9) Debt
I talk about this all the time, but debt is a female dog. I promised I wouldn’t swear. You must focus on being debt free or you won’t be wealthy. Debt crushes dreams and zaps bank balances. It also ruins lives in the process. If you carry debt your whole life you will not be wealthy, unless you are the President. For the average person, being debt free is of top priority because the interest you pay is a wealth killer. You need to be making interest on your savings, not paying interest on your debts.
10) Toxic Relationships
I have several friends that are in toxic relationships that actually cost them money. You have to remember that a good relationship requires sacrifice, patience and two people working together towards a common goal. One person supporting the other at all times is not right and not fair. One person bringing the other down isn’t good either. I have met many people financially ruined after a toxic relationship. We have to remember that the number one reason marriages fail is because of money. Get on the same page there and nothing will stop the two of you.
These Wealth Killers can be and should be avoided at all costs. Making the right decisions is a key part of obtaining and growing wealth. Grab and hold on to the good stuff; avoid and minimize the bad stuff. It is all part of the process of becoming wealthy so don’t be afraid push off and stand on your own. Remember that most people don’t become wealthy for one simple reason. Not because they can’t, but because they don’t think they can.
Thanks for reading our post today as Wealth Week continues at Budget Boss. Shoot me a message if you have an idea for a blog post at joe@budgetboss.ca. Tune in tomorrow as we wrap up Wealth Week and talk about the ultimate wealth goal, retirement. Have a great day friends!
“Gratitude is riches. Complaint is poverty.” – Doris Day
Email – joe@budgetboss.ca
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