4 Spending Habits Money Experts Say Prevent Wealth-Building
Building long-term wealth generally means making smart decisions with your money. Investing consistently and prioritizing paying off debt are just a few of the more basic examples.
If you're someone who often spends their money on things that don't have lasting value, you may simply have a hard time deciphering which purchases are preventing you from building wealth. Financial planning experts often cite the following as areas you shouldn't spend your money if you hope to one day be rich and financially sound.
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1. Buying Luxury Items
This includes designer clothing, expensive watches, vintage cars and any other high-priced status symbol items.
"Buying luxury items you can't afford can be a significant drain on your finances," said Ryan Cullen, co-founder and CEO of Cullen Cioffi Capital Management. Cullen recommended concentrating on building your wealth by investing in assets that appreciate in value over time, like stocks or real estate.
2. Caving To Impulse Purchases
Impulse purchases can be lottery tickets or anything you might buy when you're feeling a bit emotional, like going on a shopping spree after a difficult day at work. These add up over time and can drain your finances. The better approach, Cullen said, is to focus on building a solid financial plan and sticking to it.
3. Renting Long-Term
"Renting may seem like a more affordable option than owning a home, but it can be more expensive in the long run," said Cullen. "Focus on building your wealth by investing in real estate, whether that's buying a home or investing in rental properties."
4. Carrying High-Interest Debt
Those who want to build their wealth but have credit card debt, payday loans or personal loans may find paying high-interest rates is quickly eating into these efforts.
To avoid high-interest debt, Cullen recommended living within your means, creating a budget and paying off any outstanding debts in full as soon as possible.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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