5 Bad Money Habits That Are Keeping You Poor – Episode 1000

We all know how much the economy has changed over the past few decades, particularly the past few years. Traditional investing advice and a straightforward retirement plan may have worked for baby boomers, but the game has changed. Yet financial advisors, big banks, and other entities keep spouting the same financial advice that no longer works in today’s landscape. Following outdated advice will never get you the results you want.

If you’ve struggled to build wealth, chances are you are being held back by limiting money beliefs. In today’s show we’re talking about those common money myths that are keeping you broke.

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1. The first bad habit that’s keeping you poor is an unrealistic approach to debt. In the United States, we have a debt-based society that is centered around liabilities. The American Dream tells you to go into debt to buy liabilities like a home, cars, and other expensive purchases. Following this advice might help you keep up with the Joneses, but it will never lead to true wealth in today’s economy. Instead, what if you used the bank’s money to build wealth? There’s a difference between good debt and bad debt. Bad debt buys you liabilities at high interest rates. But good debt is using loans to purchase performing assets like real estate. If you do this correctly, the income you generate from your asset will cover your loan payment. This is how you build your net worth and generate long-term wealth.
2. The second outdated money habit that’s designed to keep you broke is relying on a 401k to fund your retirement. The 401k is the most prevalent retirement plan in the US, yet it leads to the most mediocre results. In recent data from Vanguard, the average 401k balance was only $112,000 in 2022. These plans are not making you wealthy, and they’re not intended to; they’re lining the pockets of financial advisors and Wall Street. If you have a company match in your 401k, you might have an argument for its merit as a piece of your retirement plan. But for the most part, a 401k will never lead to wealth. It’s a total lie that’s been sold to Americans. So what can you do instead? Buy performing assets and consider buying alternative investments inside a self-directed account.
3. The next lie you’ve been sold about creating wealth has to do with saving money. You’ve probably heard the traditional advice to automate your savings to build a nest egg. Saving money isn’t a bad idea, but if it’s your primary means for building wealth, you’re not going to get very far. Plus, if you’re parking these funds in traditional savings accounts, you’re literally losing money due to inflation. Even so-called high yield accounts like money markets or CDs have pretty low annual percentage yields. You will never build wealth using these outdated accounts. Squirrelling away your extra dollars into savings stems from a scarcity mindset that has perpetuated Americans since the Great Depression. It’s fine to have some cash reserves, but storing away all of your extra funds will keep you broke. What’s the alternative to saving money? Creating streams of income. This outdated idea of a lump sum of cash, or a nest egg, is finite. Streams of income are powerful because they generate consistent passive income.
4. Another big lie you’ve been sold is that a college education is the best way to build a career and create a good life. There may have been a time that a college degree was highly valuable, but the job market and the landscape of creating wealth has changed drastically. That’s not saying that all college degrees are entirely worthless, but it’s not the right path for everyone, and it’s certainly not the only way to make money. The computerization of business has changed the labor market. Working from home is the new norm, you can learn new skills on the internet. The ability to create passive income through real estate is available to anyone who has the willingness to learn and take action.
5. The last bad money habit that’s keeping you broke is putting too much merit into your credit score. I hear from people all the time who want to start investing and create wealth, but they feel discouraged because they have a low credit score. Having a bad credit score becomes part of their identity; it becomes this limiting belief that stops them from even trying to reach their goals. This is crazy! The credit score is a system that humans designed… it’s not real. The credit scoring system does not determine your potential or your value as a person. If this resonates with you, let me remind you that some of the most successful real estate investors started with nothing—no money, and bad credit scores. A credit score is only a small piece of your financial snapshot, and it holds little to no bearing on the level of success you can attain.

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