Americans have a great deal of disposable income relative to many other nations, yet our free spending can take us further and further away from the potential for financial freedom. Some people fall into crippling spending habits and injure their finances as a consequence.<\/p>\n
1)\u00a0\u00a0\u00a0\u00a0 Bad habit: failing to save. <\/strong>Saving \u2013 saving even $50 or $100 a month \u2013 isn\u2019t that hard under most financial conditions. Even so, some households don\u2019t put much of a priority on building a cash reserve of some kind, a portion of which could be used for equity investment.<\/p>\n When you don\u2019t make saving a goal, you don\u2019t have any money to withdraw in a pinch \u2013 so if you need to get ahold of some money, where do you find it? Basically, you have three options. One, turn to friends or Mom or Dad. Two, divert money that would go toward a core need (food, rent, the heating bill) toward the sudden crisis. Three, charge your credit card. (There are other options, but they are best not explored.)<\/p>\n Good habit: save just a little, then a lot.<\/strong> You can start a savings campaign by saving \u201cinvisibly\u201d \u2013 that is, just spending $10 or $15 or $20 less on a regular expense each month. Maybe two or three, even. That\u2019s less than a dollar a day per expense. When your earnings climb further above your financial baseline, you can increase the amount you save\/invest.<\/p>\n 2)\u00a0\u00a0\u00a0\u00a0 Bad habit: buying things on a whim.<\/strong> The correlation between impulsive spending and credit card use isn\u2019t too hard to spot. Spending money you don\u2019t have on material items that will soon depreciate doesn\u2019t put you ahead financially.<\/p>\n Good habit: set a budget when you shop.<\/strong> As you arrive at the market, the mall or the local power center, arrive with a limit on what you will spend on that shopping trip and stick to it. Take an hour (or a day) to mull over any big buying decisions \u2013 are you buying something you really need? Lastly, use cash whenever you can.<\/p>\n 3)\u00a0\u00a0\u00a0\u00a0 Bad habit: living on margin.<\/strong> Living above your means, charging this and that credit card \u2013 this is a path toward runaway debt. You may look rich, but you\u2019ll carry a big financial burden that risks being \u201cout of sight, out of mind\u201d in between credit card statements.<\/p>\n Good habit: strive for lasting affluence, not temporary bling.<\/strong> Possessions symbolize wealth to too many Americans. Real wealth is measured in accumulated assets. They aren\u2019t usually visible, but you can count on them in the future, in contrast to ever-depreciating luxury goods.<\/p>\n 4)\u00a0\u00a0\u00a0\u00a0 Bad habit: buying unnecessary services. <\/strong>Cable subscriptions, extended warranties, service contracts for highly reliable items, health club memberships that translate into little more than an alternate place to shower \u2013 they all add up, they all siphon some of our dollars away each month. In many cases, we pay for options rather than necessities.<\/p>\n Good habit: evaluate who benefits most from those services.<\/strong> Are they benefiting the provider more than the consumer? Are they entrees to a \u201cmain course\u201d \u2013 a steady, long-range financial exploitation?<\/p>\n Go against the norm \u2013 it might leave you a little wealthier.<\/strong> In April, Gallup found that 62% of Americans liked saving money more than spending it. Just 34% liked spending more than saving. This appreciation of frugality is relatively new. As recently as 2006, 50% of Americans told Gallup that they enjoyed saving more than spending with 45% preferring spending.<\/p>\n If we love saving money, a key statistic doesn\u2019t reflect it. According to the Commerce Department, the typical U.S. household was saving 4.8% of its disposable personal income in May. The personal savings rate for 2013 was 4.5%, the least in any year since 2007. Compare that to 6.7% across the 1990s, 9.3% across the 1980s and 11.8% during the 1970s.<\/p>\n Perhaps many of us want to save but can\u2019t due to financial pressures. Perhaps the economic rebound is encouraging personal consumption over saving. Whatever the reason, Americans on the whole don\u2019t seem to be saving very much. That\u2019s the status quo; going against it might help you build wealth a little more easily.<\/p>\n Best, Bill<\/p>\n <\/p>\n","protected":false},"excerpt":{"rendered":" Americans have a great deal of disposable income relative to many other nations, yet our free spending can take us further and further away from the potential for financial freedom. 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