Earning a six-figure salary doesn’t guarantee everything will be smooth sailing when it comes to your finances. It’s important to carefully manage the money you have, no matter how much that might be. Rachel Cruze recently shared her top five money mistakes that keep many of us living paycheck to paycheck. Here are her top five mistakes to avoid if you want to ensure financial stability.
1. Investing in Retirement While Paying off Debt
At first glance, it doesn’t seem like it makes sense to stop investing in your retirement fund. However, Cruze points out that your financial growth can be faster if you direct all your energy and resources toward clearing your debt first. Once you’re free of payments, you can reroute those funds to build your wealth, giving you a better margin in the long run.
“The more focused you are, the more you can bring to the table,” said Cruze in a video on her YouTube channel. “And the faster you can get out of debt, the faster you can see progress. Your income is your largest wealth-building tool, so the faster you can get out of debt, the more your income is yours.”
2. Reluctance To Cut up Credit Cards
The allure of credit cards is undeniable, given the convenience they offer. But the truth is, they are often the culprit behind spiraling debt. While you might be apprehensive about getting rid of them completely, Cruze suggests a simple solution: use debit cards or cash. This way, you’ll spend what you have and resist the temptation to accumulate more debt.
“In order to get out of debt, you have to stop getting into debt,” advised Cruze. “The easiest way to get rid of it on the spot is to get rid of your credit cards. Live off your income and money; it is so much more empowering.”
3. Giving up on Budgeting Too Soon
Budgeting isn’t just about setting a plan but persistently sticking to it. Many people abandon their budgets early on because they don’t see immediate results. Cruze says the first month is just the beginning, often revealing your spending habits. By the third month, with the necessary adjustments, you start noticing significant progress.
“It is going to take three months to get your budget to work,” said Cruze. “It’s going to bring to light where you are financially. And that’s a good thing because we want you to see what is going on so you can make progress.”
4. Fear Around Giving and Generosity
Money can be tight, and the idea of giving away any portion of your hard-earned income might be daunting. Yet, Cruze emphasizes the importance of generosity for both personal growth and character development. No matter your income, there’s always room for giving, even if it’s just a small amount. The act of giving not only helps others but also reinforces the idea of abundance and gratitude in our own lives.
5. Not Involving Your Spouse in Your Financial Journey
If you have a partner, financial harmony is crucial. Money matters can strain relationships if both parties aren’t on the same page. Cruze believes in the power of unity when it comes to finances. By sharing values, goals, and responsibilities, couples can collectively manage money more effectively, ensuring both are invested in the journey toward financial peace.
The Bottom Line
No one is immune to financial mistakes. We all have our moments of miscalculations and oversights. However, there’s always hope. With the right guidance, you can navigate the complexities of finance, build wealth, and achieve your dreams. Remember, knowledge is power, and understanding where you might be going wrong is the first step to a brighter financial future.
Editor's note: This article was produced via automated technology and then fine-tuned and verified for accuracy by a member of GOBankingRates' editorial team.
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