Have you ever felt like you’re not as far financially as you should be considering how much money you make? If you have, then you’re in the same boat that the rest of us have been in. One of the forces that drives me to be disciplined with my money is this exact feeling. There have been lots of times in the past that I have felt frustrated with myself that I wasn’t doing a very good job building wealth, given the income that I had at the time. When I took a hard look at the things that I was doing, I found that I had fallen in what I’ll call financial pitfalls. In this podcast episode I’m going to share with you some financial pitfalls that I have either found myself caught in or have seen others caught in. My hope is that sharing these pitfalls with you will help you to avoid them and will help you build a strong financial future. If you want to build wealth, I think it’s just as important to avoid doing the wrong things as it is doing the right things.

The 1st pitfall that I’ve seen people fall into is believing that they don’t make enough money to build wealth. I heard a story recently of a wealthy man who has done really well financially. The man has a beautiful home on several acres in a desired part of town. This older gentleman has several rentals properties and he’s clearly winning with money. The interesting part of this guy’s story isn’t that he’s doing well financially, lots of people do well financially. The interesting part of this guy’s story is that he never made more than 20 dollars per hour. He just saved little by little over the years. When he saw an opportunity, he purchased rental properties. The moral of the story is that you don’t need to be making a lot of money to build wealth. Consistently contributing to investments when you’re young can build a substantial chunk of wealth that you can use for income later in life. The trick is to invest often and invest as high of a percentage of your monthly income as you can. It’s not uncommon for me to work with people in their 20’s, 30’s, and 40’s who are invested 40% to 50% of their net monthly income.

The 2nd pitfall that I see keeping people from building wealth is that they spend more than they make. Spending more than we make can cause us to rack up a lot of debt. The most common debt that I see people fall back on consistently is credit card debt. When money gets tight, it’s easy to put our purchases on credit cards, which causes money to be even tighter next month because now we have an even higher credit card bill than we did this month. When I see people who are headed for financial trouble one of biggest signs that they are in trouble is that they’re racking up a lot of debt on their credit cards. Debt can be a trap where we spend and spend and spend and all of this spending adds to our debt. Eventually the debt payments catch up with us and completely overwhelmed us. What I’ve seen happen with most people is that they eventually hit a wall and say to themselves, “I’m tired of having this debt and I’m going to do something about it.” A fire is lit under them and they start to work to get their debt paid off. The turning point from over spending and racking up debt to deciding to pay off debt and then start building wealth is an interesting change in direction. Have you experience this before? Why did you change the path that you were headed on? I’ve personally seen many people on the path towards financial destruction but manage to stop, turn around, and start working their way out of the financial mess that they got themselves into. They eventually start to build wealth.