074: Are You Making One of These 6 Financial Mistakes?
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“I want to focus on investing in real estate this year, where do I start?”
“How much money should I save before investing?”
And our personal favorite “How can I build wealth faster?”
If you’re one of those people asking these questions, first no judgment, and second you’ve come to the right place. ✔️ You have to start with identifying what habits and lifestyle choices you’re making that are keeping you from achieving your goals.
In order to eat the fish 🐟 one works so hard to catch, you have to put it in a water tank to make sure they survive until you’re ready to eat– you just have to make sure there are no holes in the tank first. Because at the end of the day, there may be only one fish left from the hundreds you caught due to a lack of security. All of your efforts have gone to waste.
In a similar fashion, you can follow top investing tips, read all the financial blogs, and listen to the top 10 best money-focused podcasts, but none of that will help you hit your investment and financial goals if your bad money habits are quietly draining your hard-earned cash.
The ironic thing is you don’t know what you don’t know. Usually, it’s easy to pick out what someone else is doing wrong, but it’s always hardest to scrutinize your own behaviors. Pull the stag out of your own eye 👀 and all that.
When we were first starting out as adults and making our own money, most of us weren’t aware of our money habits (good or bad)— much less how to break them.
With bad financial habits 😞 hanging around, every good financial habit you try to practice, whether that be following the stock market, real estate investing, trading mutual funds, or attempting to build a robust savings account, will be undone.
So where do you start? Well, like with most things, you need to start with consistent actions. With bad financial habits hanging around, every good financial habit you try to execute will feel seriously uncomfortable.
No matter the new habit, whether that be following the stock market, real estate investing, trading mutual funds, or attempting to build a robust savings account– it will feel like working out for the first time after a few months off the treadmill.
So, to avoid a forever-frustrating personal finance loop we’re taking a closer look at relatable, and totally breakable, 9 bad financial habits. Now we’re going to require some honesty from you all while we talk about this. This will require you to really inspect your personal financial life and implement boundaries. But you aren’t alone! Seek help from professionals, tune in to the Kitti Sisters’ episodes of course, and start breaking these bad spending habits this year– it’s not too late! 💪💪
Drop It Like a Bad Money Habit
Picture and imagine this… you have your dream life living exactly how you want to live. Maybe you’re retiring, taking the dream vacation to visit Spanish vineyards, owning your own classic car, or home, and most importantly owning your time and not trading it for money.
But all that is brought to a record-screeching halt when you log into your bank accounts each week. Despite your best intentions, bad spending habits are wreaking havoc on your financial life, but where are you going wrong?
There are 6 sneaky bad money habits you probably don’t even know are in your life right now that are circumventing and sabotaging your best efforts. You need better money habits infused into your personal life immediately to start saving money, quit over-spending money, and build wealth.
1️⃣ Keeping Up with the Jones’
Have you ever heard the saying “You’d rather be the worst house on the best street than the best house on the worst street?” 🤷♀️ When you see that your neighbors seem to have it all, the drive to be the best house on the best street can overshadow your debt-payoff goals.
Or any financial goals for that matter. Psychologists call the relentless drive to keep up with the Joneses “conspicuous consumption.” Anytime you purchase something you otherwise wouldn’t to impress someone else or make yourself look more successful, you’re displaying what they call “wealth signals,” according to one study by MintLife. And buying solely to signal wealth or status can cause you to overspend.
While some people don’t care about measuring up to others, it can be a real challenge for others. And social media doesn’t help.
When you see your neighbors’ new purchases and follow influencers taking vacations to the Tahiti, driving that G-Wagon, and having the perfect kitchen, what those seemingly perfectly curated social profiles don’t tell you is that person’s financial situation.
Everything may seem perfect, but you don’t know if they took out a massive car loan, racked up credit card debt to fly first class to Tahiti, or they’re completely ignoring the fact that retirement is looming.
Yikes. 😨 Keeping up with the Jones’ can quickly derail financial goals, eat up your paychecks, and pour cash toward fees and interest over the years. So if you’re ready to begin investing, start building good money habits by focusing on what really will move you towards your financial goals.
Often, this means you need to sit down and evaluate your current bad money habits 🤔 in comparison to the good money habits needed to accomplish your long-term financial goals. First, look at your spending over the last year, your total taxable income, and how much money is currently in your bank account.
In some situations, reducing unnecessary spending and trimming monthly expenses might be a fantastic method to meet your financial goals. This might mean canceling retailer subscriptions such as Apple TV or your Netflix membership. We know we know, Selling Sunset is our guilty pleasure too!
Other examples include paying off credit card debt and reducing the number of opportunities you have to spend money on discretionary items. No, this isn’t a “stop wasting your money on $16 avocado toast so you can retire” lecture, this is a “how much are you spending on the not-so-essential essentials each month?” type of talk.
For some people, however, this personal finance examination and push toward better money habits may reveal that you simply need to earn more money. And for those of you who have been following us for a while, we’re definitely not saying start a side hustle. We’re not about trading more time for money. We’re all about acquiring “better” money habits, which is to acquire assets that over time build equity to will pay for your liabilities.
2️⃣ Debt that’s Productive? You Betcha!
STOP 🛑 believing debt is a bad thing. One of the best-kept secrets of the wealthy is not that they are debt-free, but that they only carry productive debt.
Soooo what’s good debt?
Good debt is an amount owed on appreciating assets, like business investments, rental properties, or fine art. Yes, art is an investment.
So, while you should definitely reduce your credit card and consumer debt (unproductive debt/bad debt) by following good money habits you must simultaneously consider ways in which you could use other people’s money (the bank’s) to invest in assets that grow in value over time and generate passive income.
As an example, let’s pretend you take on debt to buy investment real estate properties. You do the math to triple-check that the rental income covers the minimum mortgage loan payment. In addition to that, it allows you to establish a solid emergency fund for each property, and ensure there’s a little extra money left over to pad your personal finances as well.
By taking a calculated risk with good debt on rental real estate, you increased your income, and set yourself up to increase your net worth substantially as the properties appreciate. 🤓🤓
While each person’s personal financial situation, money behaviors, and risk tolerance varies, always be on the lookout for ways to bolster your financial success by reducing the amount of debt and taking advantage of good debt opportunities. They are out there, don’t believe all debt is a bad thing!
3️⃣ Not So Risky Business
Investing is indeed risky, but it’s also a sure way to 💰 grow your money. We know it’s easy to think of a million excuses not to – you may think you’re too young, too old, don’t make enough, haven’t saved enough, or you might find yourself bartering with time or how much money you can actually make.
Some people say they’ll start “next year” every single year or worse, telling themselves they’ll start when they make more money. The problem with these financial goals is that they aren’t goals at all – they are wishes without an action plan.
If you’re in that boat 🚣♀️, your aspiration to make more money is undefined. You need to get clear with your goals. How much more money do you want to make in your investments? Inevitably, even when you get that bonus or are awarded that raise, there will be another excuse for you not to invest.
Investing is a positive money habit that requires calculated risk. As an example, apartment syndications do indeed require risk– we wouldn’t tell you anything different! But they also have the potential for cash flow, appreciation, and tax benefits, not to mention that value-add apartment syndication deals positively impact entire communities. In this case, the potential reward outweighs the risk.
No matter your position within your journey toward building good money habits, you can find a method of investing money that will be beneficial to your financial health. Think of it like a buffet, there’s something for everyone!
On the other hand, if you’ve got a bit of saving and would prefer investing in tangible assets as a way to progress toward your financial goals, maybe a small rental property or passively investing in apartment syndication would help build your financial stability. Not that we’re trying to drop any hints…
Except we totally are! As with any significant endeavor, find a team who can guide you, take the time to learn what fundamentals make good investment choices, and invest an amount that won’t hinder your financial future.
4️⃣ “How Much Should I Save Before Investing?”
We hear this question all the time. How much should I save before I start to invest? A rule of thumb is to save 25% of your income; however, this may be too much or too little depending on your current money habits. When you look at the difference between your income and your living expenses and realize you have less money than expected, you’ve got to make some tweaks before you can casually invest that 25%.
Nan, this reminds me of one of our real estate friends. She knew we were big into apartment investing and wanted to learn more about how she can get started.
During our call, we were surprised that while she earned $300,000+ per year, she doesn’t have $50,000 lying around to invest. This is not a judgment zone, we understand everyone’s situation is different.
Plus you know everyone is in a different season in their lives.
But we’re sharing this so you can be aware that your spending habits may hinder you from getting to your larger financial goals.
We are all about recalibrating and in her situation it is no different.
The first step is to assess a budget based on your income and your necessary expenses. Second, set a reasonable savings percentage, and then trim costs and increase income until you reach your savings goal. ✨✨
Financial independence can only be reached when your investments are generating enough cash flow to replace your income, but to get there your monthly income and expenses have to be dialed in. Your income has to support your financial goals, and you must be investing.
It’s so easy to get ahead of yourself here. So take a step back, and think about the Freedom Metric that you want to hit monthly. Then, work backward to create a year-by-year plan that will generate your desired financial future. 😌😌
What’s the “Freedom Metric”? That’s the term we use to determine the number in which your cash flow exceeds your expenses. AKA, the financial number you need to reach in order to finally start breathing easy at night.
Once again, the “next year” excuse doesn’t work – make a plan now! Determine what percentage of your paychecks will go toward investments, bills, fun stuff (vacations or entertainment), and most importantly keep yourself accountable and write it all down. 🙌🙌
5️⃣ Getting Taxed Doesn’t Have to be Taxing
Up next, you might be doing this tax thing allll wrong.
Most people aren’t using the correct financial professionals’ for their income level. And we hate to break it to you here, but you’re probably included in that group. Let us be the first to tell you it’s time to engage a great CPA and other professionals who understand the tax laws well. 🙏🙏
Your tax refund is frequently the simplest approach to finding extra money each year. 😊😊 Think of it like a treasure hunt 👑💍💎🏺, your trusted CPA is your guide.
With a knowledgeable CPA, you can discover tax break possibilities and maintain your hard-earned cash throughout the year, allowing you to implement and hone your best money habits.
The government even provides tax advantages, they do so by incentivizing people to invest in certain asset classes, such as apartments, clean energy, etc.
Make sure you’re properly taking advantage of the tax benefits available through passive investing in apartment syndication. Trust us, there are plenty of tax breaks and hidden gems to find by taking the time to review your assets and paperwork with due diligence.
6️⃣ Squad Up
Do you know what might be hindering you from building better financial habits? Getting impatient. Letting impatience take the wheel is the quickest way to waste money while investing. This brings us to our last point. 😉😉
We live in a world of instant gratification, that’s why people get suckered into investing in meme stocks or worthless NFT because they promise immediate “profits” but guys, real deal investment can take time, 3-5 years, but you wouldn’t mind putting a dollar in and it spits out $2 back at you without you lifting a hammer or a paintbrush when the property is sold right? Remember you real after you sow, but you real a lot more than you sow.
The good news 👉 is that it’s very easy to lose your discipline when things are going well, but the bad news is that you must conduct your research and avoid making changes to your portfolio in a reactionary manner. You don’t want to be too hasty, especially when it comes to your investments playing out.
Build strong financial relationships with professionals who exhibit good money 💵 habits. These habits can look like saving and investing more money than they spend, thinking strategically about building money, and creating ways to build wealth. We all need someone to look up to right?
Let’s break any myth to stay hush-hush about money and start asking questions to people we admire about their good money habits and about how they determine when and where to invest. 😇😇
Are you ready? Because if so we have just the group for you! If you’re ready to learn more about how to handle your money while investing, the first step is to join the Kitti Freedom Club.
We, as in the Kitti Sisters team, are here to help you go from point A (where you are now) to point B (where you want to be and crush your Freedom Metric goals!)
It is possible to escape this rat race cardio and start investing in assets that grow alongside inflation, and not just relying on only one source of income.
Have a Wealthy, Healthy Mindset
As we close out today’s episode, we invite you to dream with us for a sec. How would your life change if you eliminated these 6 totally detrimental financial habits that sabotage your financial security?
Some of you might believe we just use this episode to hear ourselves talk, but that couldn’t be further than the truth! We are passionate when we say eliminating these mistakes will help you build better wealth habits and it is totally attainable! Use this better money habits as a guide, a step-by-step instruction manual to improve your financial health over the next several months. Yes, several months. This is a process! 😘😘
When you have your financial end goal in place, working to hit your Freedom Metric, and executing investment strategies that’s when you’ll stay on the right track!
the right track! Every person who had a goal had to start somewhere. Whether that was starting a weight loss journey, buying a home, or finishing a degree. We all start somewhere, and finances are no exception.
It’s time to implement better financial behaviors and set yourself up to make your dreams become reality. You know the phrase. You are who you hang out with, so come join us at The Kitti Freedom Club where we provide you with all of the tools necessary to build your long-term wealth for you and your family while taking control of your time, finance, and future. 🙌🙌
GET ME ON THE KITTI FREEDOM CLUB
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