What's Preventing You From Getting Rich

Mind-Sets That Will Keep You From Getting Rich



We're thrilled to present this smart Business Insider story here on Savvy!

A scarcity mind-set, or believing you aren't entitled to what you deserve, can hold you back financially.

"When you think the pie is already set, competing against the next guy to get a bigger piece of the pie seems pointless," says Toby Johnston, CPA and CFP with Mohler, Nixon, and Williams in San Francisco, CA.

Read on as we point out the poorest money mind-sets and how to drop them so you can get rich.

I can't make ends meet

Someone stuck in this mind-set may think they only have enough to make ends meet, says Johnston. They're living day-to-day and not thinking of the future.

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"They never get beyond thinking, 'Hey, if I made a little effort to cut back, I'd have something left over to invest,'" Johnston says.

Make going on a BS diet a priority, so you can stop spending on things you don't want and put money toward things that you do, like your emergency piggy bank.

Read on for more mind-sets.

I live check-to-check

Blowing your paycheck at the start of the month only to count down the days until you receive the next won't boost your net worth (total assets minus debt). Memorize this equation: wealth equals earnings minus what you spend.

I just got a raise — time for an upgrade!

"I think people in general have a tendency to increase their standard of living as income increases," says Johnston. "But if we spend exactly in proportion with our income rising, then we'll still wind up with the status quo."

Examples include taking out a home loan you can't afford or getting lured into Wall Street's high-stakes casino.

Try not keeping up with the Kardashians and see how much you save.

I can't afford to take risks

Some Gen-Yers are missing the boat on investing for retirement for fear of mucking it up. But don't let fear rule your money decisions. Taking risks, like investing, will stretch your dollars, plus any mistakes you make along the way will prepare you for life's unforeseen challenges. "Some people might not take on risk because they have nothing to lose," says Johnston. Get a budget going, so you're not in that boat.

I'm too old to learn anything new

Not taking the time to understand finances could lead you to make poor decisions that result in foreclosure or a tanked credit score. In fact, one economist found that women with poor math skills don't invest nearly as much as they should for retirement and are more likely to see their mortgages default. Professionally, not picking up new skills can damage your career.

"A lot of people are not strategic about acquiring professional credentials. They just get whatever degree they can to graduate from college," Johnston says.

I don't deserve that job, the better deal, the secure loan . . .

In the working world, entrepreneurs must be their own best advocates. If you're not confident about your skill set, how can you convince prospective employers? Also, not standing up for yourself can make you a prime target for predatory lenders, shady used car dealers, and other unsavory characters.

Put up a fight and always follow up on complaints to start taking charge of your finances. No one will do it for you.

It's all about the paycheck

The rich know there's more to the game than landing a fat check at the first and fifteenth of the month. "It's what you're worth, not what you earn," Johnston says. "No matter how much money you're making, if you're spending it all, you're not increasing your wealth."

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