9 Costly Mistakes Keeping You From Building Wealth

Did you imagine having a specific amount of money by a certain age, only to end up disappointed?

Maybe that dream of saving enough money to retire early became little more than a fantasy, or you hoped to have tens of thousands of dollars in your kids’ college savings accounts by now but have ended up with far less. 

It’s easy to get discouraged, but it’s never too late to turn things around and start building wealth. Focus on cutting these habits from your life to build wealth and get closer to your financial goals.

It’s natural to dream of winning the lotto or receiving a million-dollar inheritance from a relative you never knew you had. But the truth is that wealth isn’t usually something you come into overnight.

Instead, you’ll likely save by working hard for years and setting aside money from each paycheck decade after decade. When you make wise investments and your interest compounds, you can eventually build a savings account big enough to retire on.

But none of that is possible if you don’t have a lot of patience.

Being too risky is foolish. But so is not taking enough risk.

To build wealth, you must balance steady, patient savings with a willingness to take a risk now and again. This doesn’t mean buying every lottery ticket in sight. Instead, it might mean meeting with a financial advisor and learning to invest in stocks.

Taking relatively small risks like this can pay off in the long run. Many people have built savings of $1 million or more using this approach.

Creating a budget is one of the best ways to achieve financial goals. With a budget, you figure out exactly how much money is coming in and how much goes out.

Unfortunately, many Americans either don’t set budgets or fail to stick to them over the long haul.

If you’re among the millions of Americans who don’t closely track their spending, it’s time to start budgeting. Sit down with your most recent bank statement, review your purchases, and determine which unnecessary expenses you can eliminate.

If you’re waiting around for money to save itself, you’ll be twiddling your thumbs for a long time.

Wealth doesn’t just happen to you. Instead, you must make conscious choices to build it. That starts with proactively choosing how much to save and how much to spend.

Pro tip: Are you far behind in your savings? Look for a part-time job or start a side hustle so you can earn extra income and catch up on building your nest egg.

“Treat yourself” is a fun mantra, but it can negatively affect your goal of building wealth.

There’s nothing wrong with taking time for occasional self-care throughout the day. But too many happy-go-lucky shopping sprees will likely come back to haunt you, leaving you even more anxious about money.

So look for ways to cut back on fun and frivolous purchases. Know how much is too much.

Do you really end up using the things you buy impulsively while waiting in the grocery checkout line? If you can cut down on at least some of the splurging, you’ll free up cash that you can use to build wealth.

Maybe you insist that you don’t care much about keeping up with the Joneses. But even if that’s true, most of us still care deeply about keeping up with friends and family.

For instance, if one of your friends makes more money than you and frequently takes expensive trips or buys the best clothes, it’s hard to resist the temptation to spend just so you can fit in and have the same experiences.

Your relationships (hopefully) don’t revolve around such materialistic pursuits. But if you’re having a hard time saying no to a friend or family member who spends more than you can afford, try redirecting to an activity you can all participate in.

If you buy something with a credit card and don’t pay off the balance quickly, the cost of that item will likely be much higher than the sticker price.

For example, if your credit card has a high interest rate — and most do — you can end up paying much more in interest costs for the purchase.

Credit cards also come with a slew of semi-hidden fees. Some credit card companies charge you a yearly fee just so you can use the card. Many lenders also charge late fees.

You will save a lot of money if you learn to pay the balance in full on time, every time.

Getting what you want precisely when you want it feels good at that moment. But in the long run, it literally doesn’t pay off.

Money spent now is gone forever, whereas money in the bank or an investment account can earn interest that builds wealth over the years.

No one is too young to start planning for their financial future. In fact, the earlier you start, the better. The more time your investment has to compound, the higher your eventual return on the investment will be.

If you wait to start saving until you’re older, you’ll need to put away much more money per paycheck than you would if you started saving now.

Pro tip: When choosing a savings account, look for accounts with the highest yields. High-yield savings accounts allow your funds to grow much quicker than simple savings or checking accounts.

Building wealth is much easier when you choose to stop getting in your own way. Start breaking free today and get to work building the wealth you’ve always dreamed of having. 

The sooner you turn things around, the faster you can start to get ahead financially.