The goal isn’t to look wealthy. The goal is to build a life of substance.
There is a tremendous difference between looking successful and becoming financially secure.
After more than two decades in real estate, I’ve had the privilege of working with people at nearly every stage of their financial lives—from young families buying their first home to investors building substantial portfolios and individuals who have accumulated considerable wealth.
One pattern has always interested me:
People who build lasting wealth tend to be remarkably intentional about where their money goes.
That doesn’t mean they never enjoy it. Quite the contrary. Many financially successful people spend generously on their families, homes, travel, hobbies, experiences, and causes they care deeply about.
The difference is that they tend to understand what their money is doing.
Some purchases improve your life. Some purchases build wealth. Some purchases create memories.
And some simply make you look wealthier while quietly making you poorer.
Here are 25 spending habits worth considering.
1. Financing a lifestyle
There is nothing inherently wrong with borrowing money. Debt can be an extraordinarily useful financial tool.
The trouble begins when debt is routinely used to maintain a standard of living your income cannot comfortably support.
2. Buying too much vehicle
I love a nice automobile as much as the next fellow.
But vehicles are generally depreciating assets. Continually stretching for the newest or most expensive vehicle can consume an astonishing amount of capital over a lifetime.
Buy something you enjoy. Just be certain you own the car rather than the car owning you.
3. Carrying high-interest credit-card balances
Few things work against wealth creation as efficiently as compounding interest on consumer debt.
Compound interest is marvelous when it is working for you and rather unpleasant when it is working against you.
4. Constantly upgrading perfectly good things
Phones. Televisions. Appliances. Furniture. Cars.
There will always be a newer version.
Financially secure people often become quite comfortable saying:
“What I have works perfectly well.”
5. Paying primarily for a logo
Quality can absolutely be worth paying for.
Prestige is another matter.
There is an important difference between buying something because it is exceptionally well made and buying it primarily so other people will recognize what it cost.
6. Trying to impress people
This may be one of the most expensive habits of all.
The house, automobile, watch, vacation or wardrobe purchased principally for someone else’s admiration provides a remarkably poor return on investment.
Quiet financial security is considerably more valuable than visible financial success.
7. Lifestyle creep
A raise becomes a nicer car. Another good year becomes a larger house. A bonus becomes another monthly payment.
If every increase in income is accompanied by an equal increase in spending, wealth never gets the opportunity to accumulate.
8. Paying unnecessary interest
Sometimes financing makes excellent financial sense.
Sometimes we’re simply paying extra because we wanted something before we could comfortably afford it.
Know the difference.
9. Gambling and lottery spending
Occasional entertainment is one thing. Treating games of chance as a financial strategy is quite another.
Wealth is generally built through remarkably unexciting things: ownership, investment, patience and time.
10. Excessive subscriptions
Ten dollars here. Twenty there. Another $14.99 somewhere else.
Individually, they seem insignificant. Collectively, they can become hundreds of dollars every month for things we scarcely use.
11. Convenience without considering the cost
Delivery fees, service charges, expedited shipping and convenience purchases can quietly become a substantial expense.
Convenience has value. It simply shouldn’t receive an unlimited budget.
12. Habitual impulse purchases
The easiest way to avoid regretting a purchase tomorrow is occasionally to wait until tomorrow to make it.
Time has a wonderful way of distinguishing “I want this” from “I actually value this.”
13. Buying disposable things repeatedly
The least expensive item isn’t always the least expensive choice.
There is wisdom in buying quality when quality means something will perform better and last considerably longer.
14. Spending heavily on trends
Trends are designed to make what you already own feel obsolete.
Your finances needn’t participate.
15. Paying fees because of disorganization
Late fees, overdraft fees, missed-payment charges and unnecessary penalties provide absolutely nothing in return.
A little organization can be surprisingly profitable.
16. Spending tomorrow’s income today
Buy-now-pay-later programs make purchases feel smaller by dividing them into installments.
The price, however, remains the price.
Be cautious about committing future income to today’s wants.
17. Buying a house based solely on what the bank will approve
This is one I see firsthand.
A lender’s maximum approval and your family’s comfortable housing budget are not necessarily the same number.
Owning a wonderful home while being unable to enjoy the rest of your life isn’t much of a victory.
18. Renting indefinitely when ownership makes sense
Renting can be precisely the right decision depending upon your circumstances.
But for many households planning to remain in an area, homeownership can become one of the most significant wealth-building mechanisms available—particularly over long periods of time.
Instead of merely paying for housing, you may also be building equity.
19. Improving a home without considering return
Not every renovation needs to produce a financial return. You live there, after all.
But before spending $75,000 on an improvement, it is worth understanding whether you’re increasing the property’s value by $75,000—or simply purchasing $75,000 worth of personal enjoyment. Both can be perfectly legitimate. Just know which one you’re buying.
20. Neglecting maintenance until it becomes expensive
This applies particularly to real estate.
A modest repair today can become a substantial repair later.
Roofs, HVAC systems, moisture issues, drainage, paint and routine maintenance are not particularly exciting expenditures.
Neither is replacing a rotten wall.
21. Spending every unexpected dollar
Tax refunds, bonuses, commissions and inheritances have a curious tendency to disappear.
Consider deciding what you’ll do with unexpected money before it arrives.
22. Buying things instead of assets
There is nothing wrong with buying things you enjoy.
But over a lifetime, financially successful people tend to direct a meaningful portion of their income toward things capable of producing value—businesses, investments, retirement accounts and real estate among them.
23. Neglecting experiences while accumulating possessions
This one may seem contrary to an article about saving money, but I think it matters.
The purpose of financial discipline isn’t to die with the largest possible bank account.
Take the trip with your children. Have dinner with your parents. Celebrate the anniversary. Create the memory.
Wisdom isn’t refusing to spend. It’s knowing what is worth spending on.
24. Allowing generosity to become an afterthought
One of the great privileges of financial success is the ability to help others.
Giving doesn’t merely belong at the end of wealth creation after we’ve decided we finally have “enough.” For many people, generosity is part of the purpose of building financial margin in the first place.
25. Confusing wealth with money
Perhaps this is the most important one.
A large bank account cannot guarantee a good marriage, well-adjusted children, meaningful friendships, good health, peace of mind or a life of purpose.
Money is valuable.
But it is still only a tool.
Build Wealth. But Know Why You’re Building It.
Financial success isn’t necessarily about living cheaply.
It’s about living intentionally.
Spend thoughtfully. Save consistently. Own assets. Avoid foolish debt. Take care of what you have. Invest for the future. Enjoy some of what you’ve earned. Give generously.
And don’t become so consumed with accumulating more that you fail to appreciate what you already have.
There is an old temptation to measure success by what we can display. I think there’s a better measure: what we’ve built, whom we’ve helped, how we’ve treated people, and what we’re able to do with that which has been entrusted to us.
The goal isn’t merely to become wealthy.
The goal is to build a life of substance.
Live well. Give generously. Build wisely.
— Matthew Hanks Hanks Realty Group | eXp Realty
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