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12/13/2024 6 financial taboos preventing you from building wealth Have you ever felt uncomfortable discussing money? You’re not alone. But failing to address financial taboos head-on can be detrimental to your wealth-building journey. Here are six behaviors involving financial taboos, and tips on how to overcome them. 1. Not discussing money with friends and family Money is a sensitive topic for many people. In fact, only 38 percent of Americans are comfortable discussing their bank account balances with family and close friends, according to Bankrate’s recent Financial Taboos survey. That makes finances a less popular conversation topic than political or religious views. It can be especially tough to broach the subject because many people avoid talking about money at social gatherings. Only 14 percent of U.S. adults say money is a normal discussion topic at holiday gatherings with friends and family, the same Bankrate survey found. While discussing money can be uncomfortable, it’s a great way to share your experiences and learn from others. By asking common financial questions, like how to boost your credit score or save more money, you might be surprised by the helpful advice you receive. Sometimes, all you need to do is ask — and be willing to open up to those around you. 2. Lending money to friends and family Another financial taboo, lending money to family and friends, can put a strain on your budget, especially if the money never gets repaid. Half (50 percent) of U.S. adults say they’ve lent money to someone with the expectation of being paid back, Bankrate’s Financial Taboos survey found. Of those that lent money or paid for a group expense with the expectation of being paid back, 42 percent say they’ve lost money and 9 percent say the experience damaged their credit score. Lending money to a friend or family member can be risky. While it’s a generous gesture, it can backfire and lead to awkward situations if the money isn’t repaid. To avoid those pitfalls, consider these strategies: 3. Not having enough saved for emergencies Just 1 in 5 American households (20 percent) increased their emergency savings from January 2024 through August 2024, according to Bankrate’s Emergency Savings survey. Meanwhile, one-third of households (33 percent) have less emergency savings now than at the start of 2024. Nearly two-thirds (62 percent) of Americans say they’re behind on their emergency savings, the survey found. And many who are behind on emergency savings don’t think they’ll be back on track soon, or ever. Failing to save money can be a major financial mistake, especially when life throws you a curveball. You may be forced to take on high interest credit card debt in order to make ends meet, which can hold you back from achieving your goals. Try these tips to start beefing up your emergency fund: 4. Failing to save for retirement Most people dream of a comfortable retirement, but saving for it can feel daunting. Many people don’t contribute enough to their 401(k) or IRA — or they simply feel like they’re not saving enough. A majority (57 percent) of American workers think they’re behind where they should be on their retirement savings, according to Bankrate’s latest Retirement Savings survey. And nearly half (48 percent) of American workers with a retirement goal in mind don’t think it’s likely they’ll be able to save that much. Whether you want to save $1 million or $10,000, it’s important to start building your retirement nest egg as early as possible. Your savings will grow over time thanks to compound interest, which means your money earns interest on the interest it earns. Make sure to get the most from your company 401(k) too, and if it’s offered, matching contributions from your employer. You can also explore the best Roth IRA accounts if your employer doesn’t offer a tax-advantaged retirement plan. If you’re not sure where to start, a retirement calculator can help you determine your savings goal. Bankrate’s calculator makes it easy to estimate how much you need to save. 5. Taking on debt to travel, dine out or attend live entertainment Many people consider racking up debt on non-essential expenses a financial taboo. Remember the “pay yourself first” rule? Financial experts recommend saving and investing before spending on fun purchases, yet most people are guilty of prioritizing wants over needs at some point. According to Bankrate’s Discretionary Spending survey from April, 27 percent of Americans say they’d be willing to go into debt to travel. Meanwhile, 14 percent would take on debt to dine out and 13 percent would take on debt to attend live entertainment. It might be tempting to indulge in discretionary spending. After all, you’ve worked hard for your money, so don’t you deserve to splurge? However, doing so can really damage your finances. It’s a bit like bingeing on junk food when you’re on a diet — it feels good in the moment, but it keeps you from reaching your goal. Before you spend big on that vacation to Fiji or Taylor Swift concert tickets, ask yourself these questions: 6. Keeping financial secrets from your partner Financial infidelity — or keeping money secrets from your spouse or partner — might be the biggest financial taboo of them all. Not only can it strain (or ruin) your relationship, it can lead to nasty financial surprises down the road. Yet financial infidelity is shockingly common. Bankrate’s Financial Infidelity survey in January 2024 found that 42 percent of U.S. adults who are married or living with a partner say they’ve kept a financial secret from their significant other. Financial infidelity can take many forms. Thirty percent of survey respondents reported spending more than their partner would be OK with while nearly a quarter (23 percent) racked up debt without their partner’s knowledge. Financial secrets can quickly spiral out of control. If you’re hiding spending habits, debt or even bank accounts, it’s time to be honest. This way, you and your partner can address the issue and move forward together. To maintain transparency, consider having regular money dates. These meetings can help you and your partner discuss bills, plan for the future and avoid financial surprises. Bottom line Breaking free from financial taboos isn’t always easy, but it’s essential for achieving long-term financial stability. By challenging these deeply ingrained beliefs and adopting a more informed approach to money, you can help unlock your wealth building potential. You may also access this article through our web-site http://www.lokvani.com/ |
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