Oftentimes, one of the best ways to learn something is to study the opposite.
In this case, let’s just take a look at 10 ideas that will take you backwards financially in order to get a clear picture of what not to do.
1. Spend more than you make
Actually if you only do #1, you won’t have to worry about the other 9. This is the easiest way for anyone to become poor. It doesn’t matter if you make millions or hundreds each month, the same principle applies.
2. Lust after what you don’t have
Desiring something better is not a bad thing, but lusting after it is. Buying things you can’t afford, because you are not content to wait until you can afford it is a great way to stay poor.
3. Never give to anyone
It seems counter-intuitive, but keeping everything to yourself only causes you to have less. Proverbs 11:25 says “The generous man will be prosperous, And he who waters will himself be watered.”
4. Don’t pay attention to where your money goes
From talking to people about budgeting, I find that most of them say that when they started budgeting it seemed like they had a whole lot more money. The reason being that they didn’t know where it was all going before they were budgeting. I had a similar experience myself. I said, and really believed, I knew where my money was going, but once I started a budget, I was amazed at how much more money was available.
5. Get a loan for everything… cars, a new bedroom set, a vacation ***BONUS: use credit cards with a 25% interest rate!
Using cash to buy things (especially items that depreciate in value) is the key to breaking out of the “poor” cycle. Ever notice what part of town you typically find the rent-a-centers? It isn’t where the wealthy people live. As Kiyosaki said in his famous book, Rich Dad, Poor Dad, the poor (and middle class) buy their luxuries immediately and on credit. The wealthy wait, save up and buy it with cash.
6. Wait for the perfect time to start saving
As with most positive life changes we can make, there never seems to be a perfect time. Now is always better than later.
7. Follow the crowd
The older I get, the more I realize that the crowd is often wrong. The crowd is also mediocre. I often have to remind myself the reason I am driving an old (paid off) car, while some of my friends are driving brand new (borrowed) cars is because I am patiently waiting for the reward of avoiding debt. As Dave Ramsey says, “you have to live like no one else today, so you can live like no one else tomorrow.”
8. Don’t worry about the little things, they don’t really add up
God seems to be into the little things. I think that is why the Bible says He uses the simple things to confound the wise. Everyone looks to the big things and the flash-in-the-pan, but it seems to be the little things that make the biggest changes. I don’t think it is any different in our financial lives. I mean how else could a family making $35,000 each year retire with millions and a $10 million lottery winner end up bankrupt?
9. Invest your money in things that you know nothing about
We should know where our money is going and why it is going there. Don’t just buy a stock because you got a “hot tip”. Buy a stock in a company that you understand how they make money, who their customers are, and if there is evidence suggesting that the business will continue to thrive.
I have invested in things I absolutely didn’t understand and I will just say it is a bad idea all the way around. It is always a better idea to hold your cash in a money market account until you understand the investment. Then, once you understand, pull the trigger.
10. Waste stuff – money, food, time.
I remember hearing that “someone who is wasteful, is not really thankful.” I am not sure if that is always the case, but as stewards we have a responsibility to minimize our wastefulness. Jesus even had the disciples pick up the scraps after He miraculously fed 5000 so that none was wasted (John 6:12).
Do you have any to add to the list?