Jaspreet Singh knows that nearly all bad financial habits result in wasted money — extra income not earned, investment returns never realized, interest never compounded, etc.
But the most common wealth-killer of all is overspending.
“If you spend all of your money, you will never have a chance to become wealthy,” the personal finance guru said in an exclusive GOBankingRates Q&A. “This is where most Americans fail. Most Americans work to buy nice things like fast cars, nice vacations, and luxury clothes. But if you spend all your money, you will never become wealthy.”
Overspending might be the most destructive bad money habit, but it’s hardly the only one. Here are the five that Singh wants you to break first.
It’s easy to envy famous social media money braggarts like Floyd Mayweather, and you should follow his example and post pictures of yourself flashing your cash — after you retire 50-0.
Until then, resist the urge to let the world know you got paid.
“First of all, you’re not fooling anybody,” Singh said on his Minority Mindset YouTube show. “We all know that you’re just holding a stack of singles with a $100 bill on top.”
But if you sell it well enough, people might start to believe that you’re drowning in cash — and that’s where the trouble starts.
Sing said, “It doesn’t matter if you made $10 or $100,000. Once you tell everybody you got paid, everybody suddenly wants to be your friend and help you spend that money.”
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One of the greatest fundraising stories in American business is that of FedEx founder Fred Smith, who took his struggling company’s last $5,000 to a blackjack table and turned it into $27,000 so he could fuel his planes for another week.
A great story, indeed — but there’s a reason they don’t teach gambling as a fundraising strategy in business school.
Singh referenced this story on Minority Mindset while advising his followers not to blow their money in pursuit of long-odds jackpots like the Powerball.
He asked, “Do you understand that you have a one in 175 million chance of winning the lottery?”
Over a lifetime, a dollar here and a dollar there invested in partial shares of stock will produce a real-life jackpot — Singh wants you to invest your disposable income instead of throwing it away at corner markets.
Many advisors delicately counsel their clients to eliminate frivolous spending, but Singh puts it a little more bluntly.
He said, “There are things that you need, like food and a place to live. There are things that you want, like a new pair of jeans. And then there are dumb things like a $400 umbrella that you’re probably never going to use. If you want to buy dumb things, that’s fine. Just make sure you can afford it first.”
A good test is what Singh calls “the rule of five.”
“If you can’t buy five of them, you can’t afford one of them,” he told his viewers.
In Singh’s experience, most people are what he calls “cliff spenders,” who blow through money at a frantic pace right when they get paid. They quickly run out of cash and have to wait until their next check, only to repeat the process.
If it were drawn out on a graph, the chart would look like your money was falling off a cliff.
Singh said a lack of budgeting drives most cliff spending.
He said, “Open up an Excel spreadsheet and write your income on top and all your expenses below it. See where your money is going and see where it should be going and compare the differences.”
Singh frames his final tip in the context of his own life — a former real estate salesman, he understands how commission-based pay incentivizes upselling.
“Not only is this what we want, but we’re trained to get you to close the deal,” he told his Minority Mindset audience. “What you need to do is know your number. Next time you go to the appliance store, and you’re looking at the $250 fridge that you can afford, and the salesperson comes to you and says, ‘Hey, take a look at this $2,000 fridge you can’t afford. All you have to do is pay us $200 down and $70 a month for the next five years,’ I want you to turn around, look the salesperson in the eye and say, ‘No.'”
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