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Everyone has lifestyle habits that impact their finances.
Habits like driving an affordable car and spending according to abudgetcan help protect or improve your financial well-being.
Other habits, called wealth-killers, drain your finances and hamper or deteriorate your financial health.
The Desire To Get Rich Quickly
Kim considers the desire to make money quickly one of the worst wealth-killers.
He said, It makes us do some stupid things when it comes to wealth-building.
Get-rich-quick schemes include:
Its crucial to be aware of the dangers of get-rich-quick schemes.
Some are scams cleverly disguised as investment opportunities.
While legal, others come withsignificant financial riskor only result in a large payout to a few lucky investors.
Like many financial experts, Kim recommends long-term investment opportunities for building wealth.
Kim explained that it may be tough to sell an unaffordable home depending on the housing market.
Some financial experts recommend committing no more than 28% of your pre-tax income to housing expenses.
Whichever homebuying rule of thumb you use, you want to ensure homeownership wont strain your budget.
Not Investing
Kim said that without investing in the stock market, you cant reach your full wealth potential.
Even parking money in high-yield savings and CDs long-term limits your earnings.
Theaverage annual returnon stock market investing is 10%.
Now consider that high-yield CD.
Some of the best rates on 10-year CDs are a 3.60% to a 3.95% APY.
However, as Kim pointed out, interest costs you when you have debt.
The latest data from the Federal Reserve has theaverage credit card APRat 22.76%.
If your monthly payment is only $250, the interest paid jumps to $6,213.58.
Kim said it is challenging to build wealth when debt has compound interest working against you.
Expensive Friends
Kim advises staying mindful of how expensive friends impact your wealth.
Sometimes, you must say no to unaffordable invitations to protect your finances.
But you dont have to give up seeing your friends altogether.
Invite them to do things that align with your budget.
Start an entertainment fund and save up to treat yourself to anoccasional expensive outing.
The key to protecting your finances is being mindful of the opportunity costs of your spending decisions.
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