6 Reasons You’re Not Rich Yet

You just can’t seem to get ahead. No matter how hard you work, you never seem to have as much money as you need, and you’re wondering how on earth you could ever become rich.

There’s a chance you may be falling into one (or more) of these 6 traps that can sabotage even the best money management plans.

1. You’re In Debt

Debt is one of the biggest drains on financial success. It’s very easy to get into

debt, and once you’ve got it, it can take decades of your life and tens of thousands of dollars to pay off. No purchase is worth spending the rest of your life paying it down.

If you’ve got outstanding credit card balances, do everything in your power to pay them down—and to avoid taking on more credit in the future.

Avoiding debt might mean making huge trade-offs: perhaps you need to elope, or plan a very small and low-key wedding, rather than going into debt to pay for a grand ceremony. Maybe you need to skip celebrating your birthday this year. Or perhaps you need to drive an old clunker car for years before you save enough to pay cash for a nicer car.

Those tradeoffs are worth it, though, when you enjoy a debt-free lifestyle.

2. You Don’t Have a Budget

It’s impossible to become financially successful without a budget. Budgeting is money management 101, and without it, you won’t have any solid idea where your money is going—and where you might be wasting it.

Sit down today and figure out all of your monthly expenses, then take a long, hard look at them to determine which expenses can be trimmed or even cut. Once you’ve got a solid budget worked out, track your spending to make sure you’re sticking to it.

If you’re not detail-oriented, try a “simple” budget such as this 5-category budget or even – at its most basic – this simple 2-category plan of paying yourself first and then spending the rest.

3. You’re Not Saving

Saving for the future is essential. You should have approximately 3-6 months’ worth of income saved up in case of emergencies, and you should also consistently be putting money aside for long-term goals like retirement, your children’s education, or putting a down payment on a home.

If you don’t save for these things now, you could find yourself taking on debt in the future in order to finance them.

4. You’re Not a Savvy Shopper

Do you buy things on impulse? Grocery shop without a list? Give into sales pressure even if you don’t technically need something? All of these things will chip away at your ability to build positive net worth.

Learn to discern whether something is a want or a need, and to comparison shop for items you do need. Whenever possible, put big items on a 30-day “wait list” to make sure you’re not giving into impulse, and to track any potential sales to see if you can get them cheaper.

5. You’re Giving In to Lifestyle Inflation

Raises and promotions won’t do you much good if you turn around and spend that extra money on a bigger, pricier lifestyle. Rather than seeing extra income as an excuse to spend, try to put it to use by investing it or adding it to one of your savings goals.

6.You’re Not Insured

If you don’t have proper insurance coverage, you’re playing a risky game with your money. Spending a little money on monthly payments now is more than worth it in the event the unexpected happens.

Make sure you’ve got adequate coverage when it comes to health insurance, life insurance, automobile insurance and renter’s or homeowner’s insurance.

Hopefully, you’ll never have to use it. But if you do, you’ll be glad you’re covered.