7 MONEY MISTAKES That Keep You POOR

Sharon Tseung Personal Finance Leave a Comment

In this episode, we are going to go over 7 money mistakes that keep you poor. Becoming aware of these ahead of time will allow you to prepare yourself financially for your future! If you’ve made any of these mistakes – it’s okay – we’re all learning!

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7 MONEY MISTAKES That Keep You POOR

Transcription

Below is a transcription of the podcast. This transcription was taken from Otter.ai so it might not be completely accurate:

This is the digital nomad quest podcast with Sharon Tseung. teaching people how to build passive income, become financially free and design the best lives. Hey guys, Sharon from digital nomad quest, and today we’re gonna go over seven money mistakes that will keep you poor. The reason why I wanted to make this episode today is that I’ve seen people around me make these types of money mistakes before, I’ve seen people regret their money decisions. And it just is so useful to learn these things ahead of time. By learning these money mistakes ahead of time, you can really start being aware and making sure that you’re building wealth over time and minimizing the chances of making these money mistakes. Now, if you’ve made any of these mistakes before, it’s okay, don’t beat yourself up. Because it’s all a journey. Everyone’s personal finance journey is personal. That’s why it’s called personal finance. And we’re not here to judge we’re not here to compare with one another. And this is all about making sure that we are living a life true to ourselves that isn’t restricted by financial situations. So that’s why the channel is here. Today, we’re all trying to improve our personal financial situations are now let’s just get right into number one, you should not get store credit cards. So have you ever made a purchase at a store like forever 21 or something like that, and the cashier asks you would you like to save 20% off by getting a store credit card, you’ve probably heard these tons of times, and it might be tempting to start opening up a bunch of these credit cards, but there are actually different things about it that make it not the best thing to do. So first off, the benefits are way lower than regular credit cards. And most likely, you can only earn high rewards by purchasing from that store. So for example, for forever 21 There’s probably some type of cashback or percent off if you are shopping at Forever 21. But any other store, it might not have that good benefits, plus, a lot of them just give you store credit. So instead of going with the travel rewards, or the cashback that you could get, you’d only just get money to use at Forever 21. So it’s not as beneficial, you might have heard about travel hacking, or like credit card hacking. And that’s where people are actually occurring credit cards to their benefit by racking up a bunch of points that they can use other travels, which I’ll go into in the next tip. But basically those people are making sure they’re paying off their bills on time. And then they’re just racking up the different benefits. They’re looking at cards and their different signup bonuses and seeing which ones will actually make the most money back. And you can actually do a lot of things like fly first class or get a ton of money back just from getting these signup bonuses. So you’re better off getting these better credit cards that have better bonuses that allow you to use on multiple categories. Now these store credit cards usually come with an even higher annual percentage rate, which is the APR if you don’t pay off your credit card in full, which I’ll go into in the next tip. But basically, you should not rack up that credit card interest. So if you made a mistake with these store credit cards and you didn’t pay off your credit card bill in full, you’re going to get an even higher APR. So that means the store credit cards are going to hit you harder with interest if you don’t pay off your credit card in full. Now they usually also have really small signup bonuses basically kind of like what I mentioned earlier, for example, you might get 20% off or something like that for a $200 purchase that would equate to $40 yet back. But instead you compare that with the high signup bonuses that you could get with other credit cards that could even equate to hundreds of dollars or even 1000s of dollars back in cash. Now let’s go into the next tip it’s related is don’t accrue credit card interest, you basically get charged credit card interest if you don’t pay off your balance in full and on time. According to Wallet hubs credit card landscape report, the average credit card interest rate is 18.04%. For new offers in q2 of 2021 and 14.61% for existing accounts. Now that is super high. And you don’t want to get in that situation where it becomes a hole that you’re trying to dig yourself out of because you did not pay your balance in full, you will keep getting charged interest and you have to keep paying that off and it’s going to be really difficult to get out of and also it’s going to severely hurt your credit score. So again, you want to make sure you are always paying off your full balance on time. Number three don’t want to pay for bottle service every weekend, especially when you’re young there’s gonna be that temptation you want to go out every single weekend with your friends and you want to spend a ton of money on bottle service I myself have been guilty of it probably not the bottle service part by definitely go out a good amount of times when I was young, and every weekend out can cost so much money right you can spend 50 bucks 100 bucks, but if you’re buying bottle service is gonna cost even more on web restaurant store.com. They
mentioned depending on the location of your business bottle service can be anywhere from $300 for a small club, up to $7,500 for a well known club in a big city. And then in an article by Thrillist. They mentioned that the minimum price for bottle servers at the Las Vegas club x s, for example starts at $3,200 and the highest starts at $10,000. So even splitting this with friends is going to be a high amount the markup on bottle serves and drinks in general is just going to be so high and it gets even worse if you’re going to do that every single weekend. Now this leads into number four don’t buy things to just impress people. There’s a quote we buy things we don’t need with money. money we don’t have to impress people we don’t like you might have heard me say this before. But back in the day, when I started working on my first full time position where I was making $30,000 per year, I started thinking of time as money, for example, that equates to $15 an hour, if I bought something for $150, that would equate to 10 hours of my time. And I would think to myself, is that worth it for what I value and is that worth my time, so thinking about it like this allowed me to justify spending or make it so that is not worth my time, if there was a $2,000 Chanel bag, and my job was paying me $10 an hour, would it be worth 200 hours of my time, that’s something you have to think about. But a lot of people still do it, they want to impress people they don’t even care about because they want to just flaunt the things that they have. Like they want to flaunt the nice car and the nice bag. So then people around them and be like, oh, cool, like you are doing well with your life. But does that really matter? And I feel that quote really rings true that a lot of people do buy those things that they really don’t need just to impress people they don’t really care about. And instead, I think the better way to go is to just figure out what is in line with your values. And like spend more intentionally for example, if you are a musician, and you really care about music, and you want to have better equipment, I think that purchase makes a lot more sense because it is in line with your values. It’s something you’re passionate about. And it makes sense to spend more money on that. So I’m not saying to completely stop spending, but instead to just be more intentional with your spending and make sure it’s for you and not for other people. And make sure to think about it like that previous example where I was equating the purchase to the amount of time you spent to make that money, then think if it’s worth it for you. Number five, you want to make sure you don’t gamble regularly. According to casino.org. World gambling statistics show that around 26% of the population gamble. That means around 1.6 billion people worldwide gamble and 4.2 billion gamble at least once per year, no matter what casinos exist, because the house always wins, like they say meaning that they have advantages that ensure that they’re always going to profit off of you. And basically, the longer you play, the more you normally would lose more money. So once in a while, I think it’s okay if you’re just trying to go have fun or whatever, but know that it’s not a vehicle to make money or grow your wealth. Basically, if the house always wins, you are more likely to lose in the long run. Alright, number six is don’t invest outside of your risk tolerance level. So you want to be prepared because there are no guarantees, I would say investing is more about the mix of your portfolio versus just picking the hottest stock, it’s more about making sure your portfolio is diversified and matching your risk tolerance level. So the more risk tolerant you are, you might make your portfolio a little bit more higher risk, higher reward, maybe you are in the wealth accumulation phase, and you’re more about that versus the wealth preservation phase. And I’ve known some people who have overleveraged, for example, even in real estate, and they’ve lost a lot of money because the market turn and you want to make sure that you are not over leveraging you’re making sure you are comfortable with how much you are risking you can sleep well at night because you never know what’s gonna happen. So Mistake number seven is don’t not invest. Investing allows you to put your money into vehicles that have the potential for stronger rates of return, I like to look for safer long term investments, for example, in ETFs, like QQ or SP y, or index funds like Vanguard, because they basically include a basket of stocks, it’s not just investing in one. And I also like to make sure I diversify my portfolio. So I invest in also real estate as well as stocks and even crypto. So having a solid mix makes it so that you’re not just putting all your eggs in one basket, then if anything happens to it, you still have other types of investments to balance it all out. But again, if you’re investing, make sure you’re doing your due diligence, don’t just invest blindly. You want to make sure you’re doing your research beforehand. So you’re not just investing in whatever everyone else is investing in, you got to make sure you do your own analysis and actually believe in what you’re investing in. But again, investing does come with risks. I’m not a financial advisor, make sure you do your own due diligence. Now I hope you guys enjoyed this episode on different money mistakes that people make this all just about making sure that you guys stay informed and make stronger financial decisions, especially if you’re younger, it is important to understand these different habits that the average person tend to make and these habits could lead to problematic financial situations. If you guys don’t take care of it. It’s okay to make a mistake once in a while but you got to make sure you learn from it. And again, no one’s judging. We’re all on our different financial journeys.
So hope you guys enjoyed this episode. Please make sure to rate review and subscribe. It really helps our podcast grow. And thanks again. I’ll see you guys in the next one.Transcribed by https://otter.ai

About the Author

Sharon Tseung

Hi, I’m Sharon Tseung! I’m the owner of DigitalNomadQuest. I quit my job in 2016, traveled the world for 2 years, came back to the Bay Area, and ended up saving more money and building over 10 passive income streams on my digital nomad journey. I want to show you how you can do the same! Through this blog, learn how to build passive income and create financial and location independence.

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