Top 10 Reasons You’re Not Rich Yet

Being “rich” can mean different things to different people, but I believe it means having the financial freedom to achieve your goals and live the life you want. I am great at giving advice; I am not so great at taking my own advice. (Know anyone like that?) So when it came to helping my clients understand why they weren’t rich yet, the easy part was explaining the culprits because I was all too familiar with most of them.

1. You Spend Money Like You’re Already Rich

Sure, it feels good to buy expensive things, whether it’s a luxury car, designer clothes, a big house in the burbs or a tropical vacation. Even if you don’t necessarily buy pricey items, if you consistently buy stuff you really don’t need, it still adds up fast.

But the shopping high only lasts until the guilt and regret set in or the credit card bill arrives. Most of us are guilty of living beyond our means and using credit cards more than we should. The problem is that as long as we continue to spend more than we have, we can’t start building wealth. Chronic overspending and high-interest, revolving credit card debt are your worst enemies when it comes to financial success. Spend like you’re poor, and you are much more likely to become rich.

2. You Don’t Have a Plan

Without clearly defined short, mid and long-term goals, becoming rich will just seem like an unattainable fantasy. And that turns into your go-to excuse for why you shouldn’t bother saving or stop overspending. As we say in the financial industry: those who fail to plan, plan to fail.

Creating a financial plan may seem overwhelming or intimidating, but it doesn’t have to be. Whether you do-it-yourself or decide to work with a financial professional, the process simply starts with prioritizing your goals and writing them down. Put that list where you can see it on a regular basis. Visual reminders go a long way in helping us stay on track.

3. You Don’t Have an Emergency Fund

I know, you’ve heard it a hundred times: you need to have at least six months of income saved in an emergency fund. And yes, it’s much easier said than done. However, I’ve seen too many people get hit with a major unplanned expense, whether it’s a car or home repair or a medical bill, or an unexpected job loss, accident or illness that’s led to a drastic reduction in income.

When these things happen — and they do, more often than you might think — not having a financial safety cushion can make the situation much, much worse. If you’re forced to rely on credit cards, you’ll end up sinking deeper into debt instead of, yes, saving to become rich.

4. You Started Late

TWith every year that goes by without saving, your chances of becoming rich decrease. Time and compounding interest are your two best friends when it comes to growing money, so wasting them really hurts.

Just like exercising, the hardest part of saving is starting. Even if you’re in debt, making little money or have a lot of expenses, you can still always save something — even if it is a small amount. The sooner you get yourself into the habit of saving — regardless of how much — the easier it will be for you to continue and eventually increase those savings. I like to think of saving as a muscle you have to work out and build with practice. Even if you start saving late, you can still become rich if you’re committed enough. But you need to start Now.

5. You’d Rather Complain Than Commit

“Life is too expensive.” “I’ll never get out of debt.” “I don’t make enough money.” “Investing is too risky.” I’ve probably heard every excuse for why someone isn’t saving, investing or planning in general, and I’ll admit I’ve used a few of them myself from time to time.

It’s easier to be lazy and let bad habits fester than to commit to — and follow through on — changing them. It’s no wonder obesity and debt are epidemics in our country, and that millions of Americans have had to push off retirement. As long as the complaining, excuses and finger-pointing persist, so too will not becoming rich. Instead, take responsibility for your bad habits and focus on what you can do to change them. Then do it.

6. You Live for Today in Spite of Tomorrow

I get it. It is really hard to think about retirement and other distant fantasies when we have needs and plenty of wants now. The bills have to get paid, the family must be fed, momma needs a vacation — and a new wardrobe to go along with it. The problem is that impulsive and overly-indulgent behavior commonly lead to credit card debt, spending money you might have otherwise saved and, yes, not becoming rich. Do yourself a favor: Ditch the “buy now, worry later” mindset and instead, adopt a “save now, get rich later” mindset.

7. You’re a One-Trick Investor

You might be lucky enough to become rich by betting all your money on one type of investment. Just like you might be lucky enough to win the lottery. But that’s not a strategy for getting rich (at least, not one I’d ever recommend).

One of the worst financial mistakes you can make is putting all your financial eggs in one basket. Doing so puts your money at risk, whether it is being too conservative or too aggressive. Sure, the stock market is on a run and real estate is on an upswing again, but are you prepared for when the tides turn? Because they will.

And if you are invested in all fixed-income securities like CDs, bonds and annuities and think you’re safe, inflation should make you think again. Your investment portfolio needs to include a good mix of investments with varied levels of risk and return potential and liquidity (so you can get your money when you need it).

8. You Don’t Automate

Here’s the secret to saving: Automation. Saving is seamless when it’s automatic. Unfortunately, we are not born to be savers. We are impulsive and greedy by nature. Being responsible requires much more discipline. However, automation forces us to be responsible without too much effort. And all it requires is setting up regular transfers from a paycheck or bank account to a savings or investment account. Without it, we are much more likely to spend money we could be saving. Even if it is a seemingly small amount that you automate, those steady investments can make a big difference over time. Automate whatever you can whenever you can; just be careful to avoid overdrafting your account and try to increase your savings amount periodically.

9. You Have No Sense of Urgency

You might think you don’t need to worry about getting out of debt or saving because someone, or something else will save you. Maybe it’s a pay raise, a new job, an inheritance, a rich spouse, or the lottery you’re counting on. Whatever “it” is, you use it as an excuse to put off taking steps on your own to become rich. The problem is that very little in life is certain. Who knows what will actually happen, or not happen, so why not focus on what you can control now? Save now and save yourself — just in case something, or someone, else won’t.

10. You’re Easily Influenced

HMaybe you live with a chronic overspender or a typical day out with your girlfriends involves shopping. Or maybe it’s your inner “Real Housewife” that you sometimes can’t control. We all have negative influences in our lives that threaten our chances of becoming rich. The superficial, materialistic, sensational culture in which we live is probably the biggest one. The suffocating swirl of media that goes along with it makes it ten times worse.

The trick is not giving in to temptation. How? Some of it is making conscious choices to avoid putting yourself in vulnerable positions. But most of it is having the willpower to keep the goal of becoming rich in the front of your mind, especially when you are tempted to sabotage yourself.