Updated on October 17th, 2019
The idea of having a net worth of at least a million dollars is a common goal. Many people think one million dollars would allow them to live a life they always wanted or give them the option to retire early. Whether you’re in the rural heat of Georgia or the sweltering cold of Alaska, you probably think a million dollars could probably do wonders for your financial health.
While it’s not impossible to have one million to your name, odds are that you’re making financial decisions that are negatively impacting your ability to reach such a lofty financial goal. But it’s never too late (or too soon!) to get your finances in check.
Here are ways that you’re preventing yourself from ever making a million dollars, and what you can do about it.
1. Comparing Yourself To Others
Everyone is at their own place in life. Worrying about the money that someone else has (or doesn’t have), won’t help you meet your financial goals. Comparing your worth to friends and family members is a mental trap and can hold you back from meeting your goals.
It’s okay if you live paycheck to paycheck. As long as you’re working to improve your financial standing, you’re on the right path to better and brighter finances. Even the poorest of people have found ways to climb to the top.
Stay focused on yourself and your goals. Take the time to sit down and crunch the numbers to figure out what you need to do in order to have seven figures. Don’t spend time envying others who are ahead of you financially. Put your mind to it and you too will get there.
2. Not Tracking Your Spending
How can you make a million dollars if you don’t know what your income is or where it’s going? Anzimportant step in saving such a large amount of money is to have a sound budget. You need to know how much money you make, how much of it goes towards bills, and where any remaining money should be put.
If your goal is to save as much as possible, you’ll need to create a budget and then focus on ways to trim your spending. This means cutting down on buying things you don’t need, and cutting expenses where possible.
With A Budget You Can:
- Make your money last longer
- Reduce how much of your money goes towards interest
- Figure out a plan for paying off debt
- Create a path forward for financial freedom and security
Budgeting isn’t fun, but you’ll thank yourself months from now when you see just how much your savings and investment accounts have grown.
3. Not Having A Financial Advisor
Unless you’re a financial or investing guru, having a financial advisor pays for itself. With guidance from a professional, you can examine your current financial health, develop goals, and create a plan for meeting those goals.
No matter where you are in life, a financial advisor can be a great source of information.
Not sure where you can find a financial advisor? Most financial institutions offer them. But if you’re looking for a one-stop-shop to find professionals in your area, you can use the Careful Cents site to compare the best financial advisors to ensure you get the best possible service.
4. Not Paying Off Debt
Debt only drags you down. If you’re serious about amassing a million dollars or more in your lifetime, you’ll need to pay off as much debt as possible. This includes credit cards, student loans, car payments, and other expenses. Of course, if you own a home, you likely won’t be able to wipe out all of your debt. What’s important is that you eliminate unnecessary debt.
Mortgage debt is good debt, as a home gives you access to equity and can be sold for a profit. On the other hand, ever-growing credit card debt doesn’t do much for your financial situation.
The more debt you pay off, the more you have to put towards saving.
5. Using Credit Poorly
Having a credit card is a critical part of building your credit score, but most people tend to fall into the trap of over-using their credit card or using it for frivolous purposes. The 2019 Modern Wealth report created by Schwab found that millennials spend almost $500 a month on nonessential items such as vacations, eating out, and entertainment.
Using your credit card to pay for nonessential items only makes sense if you have a rewards program that gives you cashback. Otherwise, it’s best to stick to using your credit card to pay for things that will benefit you financially.
Another common credit mistakes that people make is carrying a credit card balance. Charging high balances to a credit card that you can’t afford to pay off within 30 days is detrimental. Because you’ll be subject to a likely high-interest rate, this means you’re losing money that you could be saving to meet your million dollar goals.
Making a million dollars isn’t an impossible financial goal. But sometimes we’re our own worst enemy. If you’re holding yourself back, now is the time to start making smart financial decisions.
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