I used to think I needed a positive attitude about money in order to become wealthier. While staring at a “vision board” with photographs of mansions made me unhappy with what I already had, it didn’t help me achieve material things. By being a little more pessimistic and careful with money, I’m never broke. A recent article by The Street talked about the 7 kinds of people with habits and attitudes that make them broke. I thought about different personality “ticks,” and thought of ways I can avoid falling into common financial traps.
Keeping up with the Joneses
According to the article, people who are broke often live beyond their means to impress others. At this time, most of my neighbors are selling their homes to find homes in more desirable communities. If I wanted to keep up with them, I’d have to take out a new 30-year mortgage and start the clock all over again. At this time, I only have 12 years left before I own my home outright.
Procrastinating with bills
Another bad financial habit is to pay bills late. As a pessimist, I pay my bills as early as possible because I’m worried something might go wrong. If the payment doesn’t go through, I still have several weeks before it’s actually due. When it comes to my mortgage, I take the late charge amount and add that to my payment so the extra money goes to pay down the principal.
Winging it without savings
One expert said people who are always out of cash tend to be overly optimistic, underestimating the bad things that could cost them money. Without an emergency savings account, it’s hard to pay for the unexpected flat tire, broken refrigerator or medical bill. I’m pessimistic about my personal life as well as the overall economy and stock market, which is why I keep a lot of retirement money on the sidelines.
Staying in survival mode
Broke people often lack drive and motivation. I stay in survival mode, which keeps me motivated to earn and save more. If everything is going well financially, I pretend to be broke. I pretend I didn’t receive a pay raise so I can contribute more to retirement. I pretend I didn’t get a tax return so I can fund my emergency savings account.
Being a blind optimist or too nice
Blind optimists don’t budget, which makes it nearly impossible to amass wealth. Other people tend to think money will solve all their problems or make them happier. It makes me happier to put money aside for the future than to spend it on a passing whim. Finally, the “sympathetic souls,” are often terrible with money because they use it to buy attention or affection. While it’s great to help others, it’s difficult to assist another person if you are homeless or broke from giving everything away.
Another person in my financial situation might buy a home that is twice as expensive or buy another car, but I live below my means to decrease my odds of ever being broke. I think a healthy dose of pessimism turned me into a saver so I would not long live paycheck-to-paycheck. When I think about my future, I feel pretty good. I can’t control the economy or world around me, but I can change how I handle money so the “balance due” number goes down while my net worth number goes up.
More from this contributor:
The Recession Scared Me into Managing My Money
My Home is a Forced Savings Account
How Our Net Worth Bounced Back