5 Everyday Money Habits That Quietly Drain Middle-Class Wealth
Written by
Cindy Lamothe
Edited by
Zuri Anderson
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We all know money can slip through our fingers — but sometimes it’s not flashy splurges or big mistakes that do the damage.
It’s the little, everyday habits that quietly chip away at your hard-earned wealth. If you’ve ever wondered why your bank account doesn’t quite grow despite steady paychecks, you’re not alone.
“Increasing prices have led to the survival debt of most Americans,” said Jeffrey Hensel, broker associate at North Coast Financial. “The change is usually nuanced to the middle class, and it starts with small changes in their lifestyle, which gradually escalate into huge financial burdens.”
Let’s take a closer look at some common money habits that could be holding back your financial growth — and what to do about them.
Credit Card Debt
According to Olivier Wagner, founder and CEO of 1040 Abroad, credit cards can be a very efficient help in managing one’s flow of income and obtaining needed benefits but they can also do much to ruin one’s wealth if they are not used with care.
His recommendation? Always pay your bill in full from month to month so as to escape from interest.
“Always charge your purchases to your credit cards that you can pay long before the bill comes due,” Wagner advised.
Stay on Top of Subscriptions
“Most people have a problem with not paying attention to their bank statements, because the small charges are not worth looking up individually,” said Wagner.
As a result, he said all together they will amount to hundreds and thousands of dollars over the course of a year. Wagner recommended regularly checking your bank statements to cancel those subscriptions that you do incur charges for.
Checking into this periodically will free up hundreds of dollars a year for you to allocate for investment purposes for you or funds to put into savings.
Avoid Impulse Purchases
Wagner noted that impulse purchases tend to be insignificant decisions that collectively create a huge drain on financial reserves.
His tip? Set up a budget for yourself for each month and cut out anything that is unnecessary for life.
“Cutting down on luxuries will create more wealth for a person in due time than spending lavishly,” he said. “That way your budget will be in line.”
Failing To Automate Savings
“Mark Cuban has spoken about how automation of his savings account did him a world of good when he started to accumulate wealth in his early years,” said Wagner.
He said the businessman made it a point to save for himself a certain set percentage of every check he received, no matter how small of an amount it was.
“This habit of making a habit of saving all the time each payday without allowing oneself to think about it has been of a lot of help to his fortunes,” Wagner added.
In short: Even a small amount of money a month that is automatically put back into a retirement fund will produce a large amount of interest in years of compounding interest in the long run.
Forgetting To Save for Retirement
“Most people do not start their responsible saving of their retirement funds until their later years,” said Wagner.
He’s not wrong. According to the Longevity Preparedness Index by MIT Age Labs and insurance company John Hancock, many Americans are falling short in saving for retirement.
He recommended beginning to contribute to an IRA or some 401(k) fund as soon as you are able to, and to especially be sure to take advantage of the employer contributions that are charged.
In sum, small amounts of money every month over a period of time will produce a horde of large nest eggs down the road because of the repeated contributions of funds going back into the fund.
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