6 Wealth-Destroying Mistakes People Make Every Day Without Knowing It

6 Wealth-Destroying Mistakes People Make Every Day Without Knowing It

Nicole Spector  Fri, October 18, 2024   GOBankingRates

When we think about wealth, we tend to think mostly about building and maintaining it. But we need to look at the other side of the equation, too: losing wealth. It’s easier to do than you think, and you could be losing wealth regularly with no idea that you’re doing so.

GOBankingRates spoke with financial experts to learn about wealth-destroying mistakes people make every day, without even knowing it.

Not Monitoring Expenses

Got an iron-clad budget in place? Great! But are you also meticulously managing and monitoring your daily expenses? If not, you’re likely losing wealth.

“Many misjudge their expenses or don’t keep an eye on their spending patterns,” said Steven Kibbel CFP, ChFC, CLU, senior editor at InternationalMoneyTransfer.com. “The ‘leak’ may impede attempts to increase wealth. You may reduce wasteful expenses and increase your savings by keeping a close eye on your spending and developing a thorough budget.”

Holding Too Much Cash

It’s crucial to have liquid cash easily available in the event of an emergency, but it’s important not to store too much cash in a savings account, even if it’s generating interest. By keeping too much of your savings in cash, you’re losing money in the long run.

“You’re not only missing out on a huge opportunity to invest and grow your money but you are also allowing your money to erode in value over time relative to inflation,” said Carla Adams, founder and financial advisor at Ametrine Wealth.

“Certainly you should keep a portion of your money in cash (an emergency fund should typically be about 3-6 months of your living expenses), but long-term savings should get invested in stocks and/or bonds.”

Yes, investing in the stock market does come with risks, but there are ways to go about it so you still come out on top.

“Investing in the stock market may seem incredibly risky — and it can be if you’re investing in individual stocks — but if you invest in broad index funds, you can expect an average return rate of about 10% per year,” Adams said. “Short-term market fluctuations can be huge at times; but, for long-term savings, the risk you take on will pay off and your money will double roughly every seven years if you’re invested in an all-equity portfolio.”

Making Just the Minimum Monthly Payment on Credit Cards

TO READ MORE: https://finance.yahoo.com/news/6-wealth-destroying-mistakes-people-130115750.html