5 Money Habits That Keep Me From Becoming Rich

Understanding money habits is crucial for anyone aiming to achieve financial stability and wealth. The way we interact with money—from how we earn it to how we spend and save it—can significantly impact our financial future. In this exploration, we delve into five common money habits that, while prevalent, can actually hinder our journey to financial prosperity.

Bad practice #1: Playing with money

Many of our early lessons about money come from childhood experiences. For some, these lessons revolve around simple play and imagination. The first money habit I learned was quite literal: playing with money. However, this didn’t involve real currency. My friends and I engaged in games where we bet using makeshift money, like folded cigarette packs that resembled cash.

For instance, a red Marlboro pack was equivalent to PhP 50 (around $1), while a green local brand was worth just PhP 5 (10 cents). This playful interaction with money taught me the basics of value and exchange, even if it was just a game. Yet, as I grew older, the reality of my financial situation became apparent. My family struggled financially, and I often wore clothes that were worn out, which made me feel different from my peers.

This early experience in understanding money, even in a playful manner, taught me a critical lesson: without money, you face limitations. It became clear that to improve my situation, I needed to work hard and earn money. This foundational lesson led me to develop grit, which is essential for overcoming financial challenges.

Working for money: A necessary reality

Growing up in a farming family, I witnessed firsthand the hard work that goes into earning a living. My mother often enlisted my help in the fields, offering me payment for each tobacco leaf I harvested. This was my first real job, and despite the physical labor, it felt rewarding.

After a long day of work under the sun, I returned home with PhP 100 (approximately $2)—actual money that I earned through effort. This experience instilled in me the understanding that money doesn’t come without hard work. I learned that effort equals reward, and this principle has stuck with me throughout my life.

Over time, however, I discovered that working for money alone may not be enough. As I advanced in my career, I quickly realized that simply exchanging time for money might not pave the way to true financial freedom. This realization pushed me to seek additional avenues for income and wealth generation.

Spending money wisely: The importance of control

Once I graduated from college, I landed a job that paid me a substantial salary of PhP 16,000 (about $320) monthly. This was a significant amount for someone just starting their career. Initially, I felt liberated, able to purchase things I had longed for, like new clothes and gadgets.

However, with newfound financial freedom came the temptation to spend irresponsibly. I quickly fell into the trap of consumerism, believing that my increasing salary would suffice. Instead of saving or investing, I bought items I often didn’t need, leading to a cycle of wanting more.

Through this experience, I learned that spending beyond one’s means is one of the worst financial habits. It creates a cycle of dependency on higher earnings just to sustain a lifestyle that often feels unfulfilling. To avoid this pitfall, it’s crucial to establish a budget and prioritize needs over wants.

• Create a monthly budget to track expenses.
• Identify essential purchases versus discretionary spending.
• Set limits on impulse buys.

Borrowing money: A slippery slope

As my salary increased, I became more comfortable with credit. Unfortunately, this led to poor decision-making. I began making purchases using credit cards, often without considering the long-term implications. I bought a washing machine, a refrigerator, and more, all at once, without understanding the burden of monthly payments.

This lack of foresight resulted in overwhelming credit card debt. I found myself unable to pay off the full balance each month, leading me to rely on cash advances to cover essential expenses like rent. This cycle of borrowing to pay off previous debts created a financial quagmire that was both humiliating and stressful.

Through this experience, I learned that borrowing too much can trap you in a vicious cycle of debt. To avoid falling into similar traps, consider these guidelines:

• Never spend more than you can afford to repay.
• Understand the terms of your credit agreements.
• Use credit cards responsibly and pay off balances in full each month.

Saving money: The cornerstone of financial health

Recognizing the need for change, I enrolled in an automatic savings program that deducted a percentage of my paycheck. Starting with just 2% and gradually increasing to 20% over time, this habit transformed my financial outlook.

This automatic saving strategy allowed me to build an emergency fund, providing a safety net during unexpected expenses. For example, when my sister had a medical emergency, I was able to cover her hospital bills without resorting to debt. This experience solidified my belief that saving money is not just beneficial—it's essential for peace of mind and financial security.

Effective saving strategies can include:

• Setting up automatic transfers to savings accounts.
• Establishing clear savings goals for emergencies or other investments.
• Reviewing and adjusting savings contributions regularly.

Investing vs. saving: Understanding the difference

While saving money is vital, it alone may not lead to financial wealth. Understanding how to grow your money through investments is equally crucial. Investing allows your savings to compound over time, potentially leading to greater financial rewards.

For example, consider the benefits of investing in:

• Growth stocks, which often provide higher returns over time.
• Index funds, which offer a diversified approach to investing.
• Real estate, which can generate passive income and appreciate in value.

As I continue to refine my financial habits, I look forward to exploring more avenues for growth. While these five habits are foundational, I acknowledge that they are just the beginning of my journey toward financial freedom.

In summary, establishing robust money habits is essential for achieving financial well-being. By learning from past mistakes and adopting a proactive approach to managing money, anyone can work toward building a secure financial future.

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