Top 3 Ways People Fumble the Bag

For how much our lives revolve around it, money is still a mystery to most people.

Sure, they know how to collect a paycheck. And they know how to use it to pay their bills.

Yet, while 44 percent of Americans report money as their main source of stress, far too many individuals struggle with understanding basic financial principles.

There are a lot of people who place the blame on the educational system, as there are only 21 states that require their students to take a personal finance course in high school.

There are almost as many who blame parents for not teaching their children about money. But what if the parents don't know?

I won't weigh in on the blame debate.

But these are the three biggest ways people fail to manage their money, and ultimately end up fumbling the bag.

Apex Living > Top 3 Ways People Fumble the Bag

They Don't Track Their Spending

A 2018 survey revealed that 65% of people didn't know how much money they'd spent in the previous month.

This one bad habit causes people to underestimate just how much they spend, especially their small, regular purchases that tend to add up.

People who don't track where their money is going tend to miss obvious blind spots where they can save and shore up their emergency reserve fund.

It is also the first step necessary to establishing a budget.

They Don't Have an Emergency Reserve

If 2020 has taught us anything, it is that nothing is guaranteed.

The current pandemic, and economic fallout has cut across a wide range of industries and affected 90 percent of consumers in some form or fashion.

A majority of workers are either a missed paycheck, or a significant health setback away from poverty, hunger and homelessness.

Even with those numbers, 25% of individuals surveyed reported that they had NO emergency savings, and nearly 60% responded that they wouldn't be able to pay a $1,000 emergency expense from savings. And this was PRE-Covid.

Personal finance experts suggest having an emergency fund in place, starting with a mere $500 and working to stash away up to a 3 to 6 month reserve for the extremely lean times.

An emergency reserve can be enough to help people avoid taking out credit card debt to make ends meet, or even worse, a high interest payday loan.

They Don't Give Their Money a Job

This is one of the worst long term habits that a person can have.

Since a significant majority of people are wage or salary earners, they are use to the paradigm of exchanging their time for money.

The problem is that many fail to realize that the money they work for, then needs to be put to work for them.

The 3 paths to wealth; Real Estate, Investing and Entrepreneurship, are all methods for leveraging money earned from labor to continue to earn more. Sadly, we, as a community, are underrepresented in all three.

The reality is that is doesn't actually matter which path one takes, as long as they get into the habit of putting a portion of their earnings to work building wealth. Early and consistently.

The journey to financial empowerment isn't a sprint, it's a marathon.

Contrary to popular belief, it isn't as much about the money as it is about the habits.

Building wealth isn't just about making more money. Rather, it begins with building better money habits.

Which money habits are you working to improve heading into the new year?