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Tips - March 16, 2022

3 Money Traps that Can Make You Poor Despite Increased Income

You’ve done the work, and now it’s paying off, don’t let your income be sucked in by these financial traps.

Getting into your thirties comes with its perks. You’re advancing into senior roles at your job, but the desire to “upgrade” is stronger than ever. Here lies one of the significant money traps that can make you poor, even in the face of increasing income. 

This doesn’t have to be the case. You’ve done the work, and now it’s paying off. It’s time to position yourself for real wealth. Let’s look at some critical money traps that can make you poor. 

1. Skipping Retirement Savings

The benefits of compound interest are never more apparent than when you receive a whopping return on investment over thirty years. Put your money in certificates of deposit (CDs), bonds, stocks, and a high-interest savings account. This may feel like a ridiculously delayed gratification in your 30s, but when you’re in your 50s and can relax knowing you’re covered, you’ll be pleased. The earlier you begin, the better.

The younger you are, the lower your monthly payment may be, and the less it will harm you in the long run. Most significantly, you will invest far less and receive a much higher return. The main advantage is the monthly tax you may save in most countries. Finally, it’s like saving money for later and receiving a little extra to spend now.

2. The Highly Expensive Partner

Don’t get sucked into supporting your spouse’s lifestyle only to meet the popular opinion of what a supportive partner should be. This will ultimately leave you broke. While treating your partner to luxury is an essential element of romance, it shouldn’t be the key focus of your financial resources. 

You and your partner must share a common financial vision. The goal is to be wealthy, not to spend everything on a whim. This is the only way you and your partner can build a future together that doesn’t entail working nonstop and never getting anywhere.

3. The Believe that Spending 

When you get a larger salary, there is an instant urge to begin living that lifestyle you’ve always imagined. However, you must understand that the external appearance of luxury does not necessarily mean being wealthy. And while we all like nice things, accumulating genuine wealth is our top priority.

Don’t fall into the trap of spending money on a brief luxurious lifestyle that you can’t afford. It will ultimately cost you your long-term financial independence.

READ ALSO: 5 Basic Money Skills that Can Make You a Millionaire

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