Okay, let’s get real. Financial experts love to give advice, but sometimes, the most helpful stuff is what we want to hear the least. In the back of our minds, we know the advice is sound, yet it can be overwhelming to understand how to implement it in our own lives.
It might sting a little, mess with our habits, or make us face hard truths. But hey, that kind of kick-in-the-pants advice can make a difference in our bank accounts and help us reach our financial goals.
So, buckle up—we’re about to dive into 15 expert money tips you might normally avoid. Brace yourself because they might just change your life.
1. Your Latte Factor is Killing You
Small, daily indulgences – the morning latte, the takeout lunch, the subscription you barely use – seem innocent. But those $5 here and $10 there add up. This is the infamous “Latte Factor,” which can be a massive drain on your finances.
A $5 daily coffee habit amounts to over $1,800 per year. Invested wisely, that money could grow significantly over time. A 2021 survey by Slickdeals found that 64% of Americans admit to making regular impulse purchases, with convenience items being a major factor.
Track your small purchases for a week. You might be shocked by how much you spend. Then, set limits and find less expensive alternatives for those daily indulgences.
2. You Need an Emergency Fund (And No, Your Credit Card Doesn’t Count)
An emergency fund is crucial because life throws curveballs – car repairs, unexpected medical bills, job loss. Relying on credit cards or loans in emergencies leads to high-interest debt.
Most Americans would struggle to handle a $1,000 or similar emergency expense.
Start small. Aim to save even $500 as a buffer. Then, gradually increase it to cover 3-6 months of living expenses.
3. Wants vs Needs: There’s a Big Difference
It’s easy to blur the lines, justifying every purchase as necessary. But separating needs (like housing, food, and essential bills) from wants (like the latest gadgets, designer clothes, or fancy vacations) is crucial for financial health.
Unconscious spending can lead to overspending, preventing you from reaching your financial goals.
Try a needs vs. wants challenge for a month. Before buying anything, ask yourself if it’s essential. You might be surprised by how much you can save.
4. You’re Probably Underinsured
Insurance isn’t fun, but a lack of proper coverage leaves you vulnerable. Review your policies for homeowners/renters, auto, health, and life insurance. Skimping here could cost you dearly in an emergency.
Unexpected events can leave you financially devastated if you are uninsured. About 64 percent of homeowners are underinsured, according to the Insurance Information Institute.
Talk to an insurance advisor to assess your individual needs and get the right coverage levels.
5. Lifestyle Inflation is Real and Dangerous
Getting a raise or bonus feels great, but avoid immediately upping your spending habits. Lifestyle inflation traps you in a cycle of earning and spending more without real progress.
Lifestyle inflation reduces one’s potential for saving, investing, and building wealth. A significant number of Americans spend most or even all of any raise they receive.
When you get more income, allocate a portion to saving or debt payoff before upgrading your lifestyle.
6. “Keeping Up With the Joneses” Will Break Your Bank
Social pressure to upgrade your house, car, or vacation to match others is a recipe for financial strain. Don’t get into a spending battle you can’t afford.
Nearly 40% of Americans overspend to impress others. Constant comparison leads to dissatisfaction and debt.
Focus on your own goals, not those of your neighbors or peers. Remind yourself that true wealth isn’t about appearances.
7. Your Budget Isn’t a Punishment, It’s a Roadmap
Budgeting gets a bad rap, but it’s a powerful tool. It’s not about deprivation; it’s about allocating your money to align with your values and priorities.
Budgeting helps you track your income and expenses, identify areas to save, and make conscious spending decisions. A large-scale study found that active budgeters have better control of their finances and higher financial confidence.
Start with a simple budget. Track your income and expenses for a month and then categorize them. Look for areas where you can cut back and redirect that money toward your goals.
8. “Get Rich Quick” Schemes Don’t Work
From lottery tickets to pyramid schemes, the allure of easy money is tempting. But the reality is that building wealth takes time and effort.
Get-rich-quick schemes are designed to fleece you. You’re far more likely to lose money than become wealthy overnight. Studies show that less than 15% of millionaires made their fortune through risky strategies.
Focus on proven long-term wealth-building strategies like consistent investing, building multiple income streams, or upskilling for a higher salary.
9. Debt is a Wealth Killer
Debt, apart from a mortgage on a primary residence, usually hinders long-term wealth accumulation. High-interest debt like credit cards is especially toxic.
Interest payments drain your money, and the cycle of debt makes it tough to get ahead. The average American household carries over $96,000 in debt.
Choose an aggressive debt payoff method (like the debt avalanche or debt snowball) and stick to it.
10. “I’ll Save Later” is a Dangerous Lie
Saving money should be a priority from your very first paycheck. The magic of compound interest works best over long periods.
The earlier you start saving and investing, the more time your money has to grow. A study by Charles Schwab found that millennials who started saving in their 20s had a median net worth 2.5 times that of those who started in their 30s.
Even if it’s only a small amount, make regular savings automatic. Set up automatic transfers from your checking to your savings account.
11. Your Retirement Won’t Fund Itself
Relying solely on Social Security for retirement is risky. Start planning and saving for your future self as early as possible.
Due to rising lifespans and demographic shifts, Social Security may provide fewer benefits in the future. Studies show that the majority of workers plan on Social Security as a major source of income in retirement.
Utilize employer-sponsored retirement plans (e.g., 401(k)) and/or IRAs) to invest for the future. Explore different options and increase your contributions as your income grows.
12. “Buy Now, Pay Later” is a Debt Trap
Buy-now-pay-later (BNPL) services seem convenient, but split payments often carry hidden fees and high-interest rates if not paid on time.
BNPL users are statistically more likely to incur overdraft fees and be charged late fees by the BNPL plan itself. BNPL encourages impulsive purchases and can lead to overspending.
If possible, save up for a purchase rather than using BNPL. If financing is necessary, compare it to traditional credit options, being mindful of fees and interest.
13. Your House Can Be A Money Pit
While a home is often an asset, it comes with ongoing costs – maintenance, taxes, insurance. Buying more house than you need can strain your finances.
Homeownership costs can be unpredictable, and a large mortgage can limit your flexibility in case of job changes or other unexpected financial situations. Homeowners spend an average of $9,080 a year on maintenance after buying their homes.
Carefully consider how much house you can realistically afford. Consider not just the mortgage payment but all the associated costs that come with homeownership.
14. Your Adult Kids Shouldn’t Bankrupt You
Helping your adult children financially might feel good in the moment, but it could harm both them and you. Enabling them can prevent their financial independence and jeopardize your own retirement security.
“Failure to launch” can have long-term consequences for your children and finances. Instead of handing out money, teach financial responsibility. Encourage your children to budget, live within their means, and build their own financial security.
15. You Need to Talk About Money with Your Partner
Avoiding money discussions in a relationship is a recipe for trouble. Be honest about your finances, goals, and any debt. Create a shared financial plan to avoid conflict.
Disagreements over money are a leading cause of stress and conflict in relationships.
Schedule regular “money dates” with your partner. Talk openly about your individual financial situations and shared goals, and create a budget plan together.
20 Things Poor People Waste Money on, According to Suze Orman
If you’ve ever watched her show, you know Suze Orman pulls no punches. She’s all about calling out bad money choices, urging people to take control of their financial destinies and ditch those pesky spending habits that derail progress. While her advice can be blunt, she aims to empower folks to build wealth and protect their financial futures.
It’s important to note, Suze Orman gets flak sometimes for being too harsh. She’s not shaming people, but highlighting how certain expenses can sabotage big goals like homeownership or a comfortable retirement.
20 Things Poor People Waste Money on, According to Suze Orman
15 Primary Differences Between Being Wealthy and Rich (According to Dave Ramsey)
We’ve all daydreamed about hitting the jackpot and living like the 1%. But here’s the thing: True wealth is about a lot more than fancy cars and designer labels. It’s about rock-solid security and the freedom to call the shots in your life – something no lottery ticket can guarantee.
15 Primary Differences Between Being Wealthy and Rich (According to Dave Ramsey)
12 Culturally Acceptable Habits That Leave Americans Drowning in Debt
The average American household carries over $103,000 in debt, including mortgages, credit cards, and car loans. While there are various factors that contribute to this staggering number, there are also certain culturally acceptable habits that have played a major role in leaving America drowning in debt.
12 Culturally Acceptable Habits That Leave Americans Drowning in Debt
With an honors degree in financial engineering, Omega Ukama deeply understands finance. Before pursuing journalism, he honed his skills at a private equity firm, giving him invaluable real-world experience. This combination of financial literacy and journalistic flair allows him to translate complex financial matters into clear and concise insights for his readers.
