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The “50/30/20 Rule”: Is It the Holy Grail of Budgeting?

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Budgeting can feel overwhelming, especially when you’re juggling bills, savings goals, and the occasional splurge. If you’ve ever searched for a simple way to manage your money, you’ve probably come across the 50/30/20 rule. This popular budgeting method promises to make financial planning straightforward, but is it really the holy grail of budgeting? Understanding how the 50/30/20 rule works—and whether it fits your lifestyle—can help you take control of your finances without feeling restricted. Let’s break down what this rule is, why it’s so popular, and whether it’s the right fit for you.

1. What Is the 50/30/20 Rule?

The 50/30/20 rule is a budgeting framework that divides your after-tax income into three main categories: 50% for needs, 30% for wants, and 20% for savings or debt repayment. The idea is to simplify budgeting by giving you clear, easy-to-follow guidelines. Needs include essentials like rent, groceries, utilities, and insurance. Wants to cover things like dining out, entertainment, and vacations. The final 20% goes toward building savings, investing, or paying off debt. This method is popular because it’s easy to remember and doesn’t require tracking every single expense. For many, it’s a breath of fresh air compared to more complicated budgeting systems.

2. Why Has the 50/30/20 Rule Become So Popular?

The 50/30/20 rule has gained traction because it’s accessible and flexible. Unlike strict budgets that require you to account for every dollar, this rule gives you room to breathe. It’s especially appealing for beginners or anyone who feels overwhelmed by traditional budgeting. The simplicity of the 50/30/20 rule means you can quickly assess your spending and make adjustments without getting bogged down in details. Additionally, it’s adaptable to various income levels and life stages, making it a go-to choice for many individuals seeking to get their finances in order.

3. How to Apply the 50/30/20 Rule to Your Finances

Applying the 50/30/20 rule starts with calculating your after-tax income. Once you know your monthly take-home pay, multiply it by 0.5 to determine your needs budget, by 0.3 for wants, and by 0.2 for savings or debt repayment. For example, if you bring home $4,000 a month, you’d allocate $2,000 to needs,$1,200 to wants, and $800 to savings or debt. Review your current spending to see where your money is going. If you’re spending more than 50% on needs, look for ways to cut back or increase your income. If your wants are eating into your savings, consider what you can trim. The 50/30/20 rule isn’t about perfection—it’s about creating a sustainable plan that helps you reach your goals.

4. The Pros: Why the 50/30/20 Rule Works for Many

One of the most significant advantages of the 50/30/20 rule is its simplicity. You don’t need fancy spreadsheets or budgeting apps to get started. The clear categories make it easy to identify problem areas and make adjustments quickly. This rule also encourages a healthy balance between enjoying life and planning for the future. By setting aside 20% for savings or debt, you’re building a financial safety net without feeling deprived. The 50/30/20 rule can also help couples or families get on the same page about their finances, as the guidelines are straightforward to discuss and understand. For many, this method is a practical way to build better money habits.

5. The Cons: Where the 50/30/20 Rule Falls Short

While the 50/30/20 rule is a great starting point, it’s not perfect for everyone. If you live in a high-cost area, your needs may consume more than 50% of your income, making the rule difficult to follow. Individuals with substantial debt or ambitious savings goals may find that 20% isn’t sufficient. The rule also doesn’t account for irregular expenses, like car repairs or medical bills, which can throw off your budget. Some critics argue that the 50/30/20 rule oversimplifies personal finance and doesn’t encourage detailed tracking, which can be important for those with complex financial situations.

6. Customizing the 50/30/20 Rule for Your Life

The beauty of the 50/30/20 rule is that it’s a guideline, not a strict law. If your needs are higher, you might adjust to a 60/20/20 split, or if you want to save aggressively, you could try 50/20/30. The key is to use the 50/30/20 rule as a starting point and tweak it to fit your unique situation. Track your spending for a month or two to see where your money actually goes, then adjust your percentages as needed. Remember, the goal is to create a budget that works for you, not to fit your life into a rigid formula. Flexibility is essential for long-term success.

Rethinking the “Holy Grail” of Budgeting

The 50/30/20 rule is a powerful tool, but it’s not a one-size-fits-all solution. It offers a simple, flexible framework that can help you get started with budgeting and build better financial habits. However, your financial journey is personal, and the best budget is the one you can stick to. Use the 50/30/20 rule as a foundation, but don’t be afraid to adapt it as your needs and goals change. Ultimately, the real “holy grail” of budgeting is finding a system that helps you live well today while preparing for tomorrow.

What’s your experience with the 50/30/20 rule? Do you follow it, or have you found another budgeting method that works better for you? Share your thoughts in the comments!

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9 Things You Should Never Finance (But Most People Do)

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We live in a world where financing is just a click away. From flashy gadgets to dream vacations, it’s tempting to spread out payments and enjoy things now, even if it means paying more later. But not everything should be bought on credit. Financing the wrong purchases can trap you in a cycle of debt, drain your savings, and limit your financial freedom. If you want to build real wealth and avoid unnecessary stress, it’s crucial to know which expenses are best paid for in cash. Here are nine things you should never finance—even though most people do.

1. Furniture

Financing furniture is a common trap. Retailers often lure buyers with “zero interest” deals, but these offers usually come with hidden fees or deferred interest that kicks in if you miss a payment. Furniture loses value quickly, and by the time you finish paying it off, it’s often already worn out or out of style. Instead, save up and buy quality pieces you can afford. Consider secondhand options or wait for sales to stretch your dollars further.

2. Vacations

A vacation should be a break from stress, not a source of financial anxiety. Financing a trip means you’ll be paying for your memories long after the tan fades. Interest charges can turn a reasonable getaway into a budget-buster. Instead, set up a dedicated travel fund and plan trips you can pay for in full. This approach saves money and makes your vacation feel truly rewarding.

3. Clothing and Accessories

It’s easy to swipe a card for the latest fashion, but financing clothes is a fast way to rack up debt for items that quickly lose value. Trends change, and so do your tastes. If you’re still paying off last season’s wardrobe, you’re limiting your ability to invest in things that matter. Stick to a clothing budget and avoid buy-now-pay-later schemes that can lead to overspending.

4. Weddings

Weddings are special, but starting married life with debt isn’t romantic. The average wedding in the U.S. costs over $30,000, and many couples finance the big day with loans or credit cards. Financing a wedding can delay other financial goals, like buying a home or starting a family. Focus on what’s meaningful, set a realistic budget, and remember that the best memories don’t come with a price tag.

5. Electronics and Gadgets

New phones, laptops, and TVs are tempting, but financing electronics is rarely a smart move. Technology becomes outdated fast, and you could still be paying off a device long after it’s obsolete. If you can’t afford the latest gadget upfront, consider waiting or buying refurbished. This habit will help you avoid unnecessary debt and keep your finances healthy.

6. Everyday Groceries

Using credit to pay for groceries might seem harmless, but it’s a sign your budget needs attention. Interest charges on everyday essentials can add up quickly, making it harder to get ahead. If you find yourself regularly financing groceries, it’s time to review your spending and look for ways to cut costs. Building a realistic grocery budget and sticking to it is key to financial stability.

7. Holiday Gifts

The pressure to give generously during the holidays can lead many people to finance gifts. However, paying interest on presents months after the celebration is over isn’t worth it. Instead, plan ahead and set aside money throughout the year for holiday spending. Homemade gifts or thoughtful gestures can be just as meaningful as expensive purchases.

8. Medical Bills

While emergencies happen, financing medical bills with high-interest credit cards or loans can make a tough situation worse. Many providers offer payment plans with little or no interest, so always ask about your options before reaching for a credit card. If you’re struggling with medical debt, consider negotiating your bill or seeking assistance programs.

9. Small Home Improvements

It’s tempting to finance small upgrades like new appliances or landscaping, but these projects rarely add enough value to justify the interest. Save up for home improvements and tackle projects as your budget allows. This approach keeps your finances flexible and ensures you’re not paying extra for something that doesn’t significantly increase your home’s worth.

Building Wealth Means Saying No to Unnecessary Financing

Financing can be a useful tool for major investments like a home or education, but using it for everyday purchases or depreciating assets is a recipe for financial stress. By paying cash for things like furniture, vacations, and electronics, you keep more money in your pocket and avoid the debt trap. Remember, true financial freedom comes from living within your means and making intentional choices. The next time you’re tempted to finance a non-essential purchase, ask yourself if it’s really worth the long-term cost.

What’s something you regret financing—or are glad you paid for in cash? Share your story in the comments!

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10 Financial Habits You Inherited From Your Parents

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Have you ever caught yourself handling money in a way that feels oddly familiar? Maybe you save every penny, or perhaps you splurge on payday, just like someone you know. The truth is, many of our financial habits are inherited from our parents, sometimes without us even realizing it. These learned behaviors can shape our relationship with money for better or worse, influencing everything from how we budget to how we invest. Understanding these inherited financial habits is crucial because they can either set us up for long-term success or hold us back from reaching our goals. By recognizing which habits serve us and which ones need a tune-up, we can take control of our financial future and make smarter choices.

1. Saving for a Rainy Day

One of the most common financial habits you inherited from your parents is the practice of saving for emergencies. If your parents kept a “just in case” fund, you probably do too. This habit is a cornerstone of financial stability, helping you weather unexpected expenses like car repairs or medical bills. If you haven’t started an emergency fund yet, consider setting aside a small amount each month. Even $20 a week can add up over time and provide peace of mind when life throws you a curveball.

2. Attitude Toward Debt

How you view and manage debt is often shaped by your upbringing. If your parents avoided credit cards and loans, you might be debt-averse as well. On the other hand, if they saw debt as a tool for building wealth—like using a mortgage to buy a home—you may be more comfortable taking on loans. The key is to use debt wisely, keeping balances manageable and paying off high-interest accounts first.

3. Budgeting (or Not Budgeting)

Did your parents sit down with a spreadsheet or an envelope system every month? Or did they wing it and hope for the best? Your approach to budgeting is likely a reflection of what you saw growing up. If you’re not already tracking your income and expenses, now’s a great time to start. There are plenty of free apps and tools that make budgeting easy and even fun.

4. Spending Habits

Whether your parents were frugal or free spenders, their attitudes toward shopping and spending probably rubbed off on you. Maybe you learned to hunt for bargains, or perhaps you’re quick to treat yourself. Being aware of these inherited financial habits can help you strike a balance between enjoying life and staying within your means.

5. Investing for the Future

If your parents talked about stocks, retirement accounts, or real estate, you’re more likely to see investing as a normal part of life. This financial habit can have a huge impact on your long-term wealth. If investing wasn’t discussed at home, it’s never too late to start learning.

6. Talking About Money

Some families are open about finances, while others treat money as a taboo subject. If your parents discussed bills, savings, and financial goals openly, you probably feel comfortable talking about money too. If not, you might avoid these conversations, even with your partner. Breaking the silence can lead to better financial decisions and less stress.

7. Giving and Charity

Did your parents donate to charity or help out friends and family in need? If so, you may have inherited a generous spirit. Giving is a wonderful habit, but it’s important to do so within your means. Setting a budget for charitable giving ensures you can help others without jeopardizing your own financial health.

8. Shopping for Value

If your parents compared prices, clipped coupons, or waited for sales, you likely do the same. This habit can save you a lot of money over time. However, it’s also important to recognize when quality matters more than price, especially for big-ticket items that need to last.

9. Planning for Retirement

Some parents start planning for retirement early, while others put it off. If you grew up hearing about 401(k)s and IRAs, you’re probably more proactive about your own retirement savings. If not, it’s easy to overlook this crucial financial habit. Start small if you need to, but prioritize retirement planning—your future self will thank you.

10. Handling Financial Stress

How your parents reacted to financial setbacks—whether with calm problem-solving or panic—can influence how you handle money stress today. Recognizing this inherited financial habit can help you develop healthier coping strategies, like seeking advice or focusing on solutions instead of worrying.

Breaking the Cycle: Building Your Own Financial Legacy

Recognizing the financial habits you inherited from your parents is the first step toward building a financial legacy that works for you. Some habits, like saving for a rainy day or shopping for value, are worth keeping. Others, like avoiding money conversations or neglecting retirement planning, might need to be replaced with healthier practices. The good news is, you have the power to choose which habits to keep and which to change. By being intentional about your financial habits, you can set yourself—and future generations—up for success.

What financial habits did you inherit from your parents? Share your stories and tips in the comments below!

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9 Financial Habits You Think Are Smart—but Actually Keep You Poor

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We all want to make smart money moves, but sometimes the financial habits we think are helping us are actually holding us back. It’s easy to fall into responsible routines, like clipping coupons or paying off small debts first, without realizing they might sabotage our long-term goals. The truth is, building wealth isn’t just about working hard or saving a few bucks here and there. It’s about making intentional choices that set you up for real financial freedom. If you’re serious about breaking the cycle and getting ahead, it’s time to take a closer look at some common financial habits that could be keeping you poor.

1. Obsessing Over Small Savings While Ignoring Big Expenses

It’s tempting to focus on saving a few dollars by skipping your morning coffee or hunting for the best deal on groceries. While these small wins feel good, they often distract from the bigger picture. The real financial habits that move the needle are those that address your largest expenses—like housing, transportation, and insurance. For example, negotiating your rent or refinancing your mortgage can save you thousands, while cutting out lattes might only save a few hundred a year. Prioritize the big-ticket items, and you’ll see a much greater impact on your bottom line.

2. Paying Off the Smallest Debts First

The “debt snowball” method is popular because it offers quick wins, but it’s not always the most cost-effective approach. Focusing on the smallest balances instead of the highest interest rates can mean you pay more in the long run. Instead, consider the “debt avalanche” method, which targets high-interest debts first. This strategy saves you money on interest and helps you get out of debt faster.

3. Relying on Credit Card Rewards

Credit card rewards can be enticing, but they’re only beneficial if you pay your balance in full every month. Many people end up spending more than they should just to earn points or cash back, which can lead to debt and high interest charges. The best financial habits involve using credit cards responsibly—treating rewards as a bonus, not a reason to overspend. If you’re carrying a balance, the interest you pay will quickly outweigh any rewards you earn.

4. Always Buying on Sale

Scoring a deal feels great, but buying things just because they’re on sale can actually drain your wallet. This habit encourages unnecessary spending and clutter. Instead, focus on intentional purchases—buy what you truly need, regardless of whether it’s on sale. Over time, this shift in mindset will help you save more and avoid the trap of “saving” money by spending it.

5. Avoiding All Risk

Playing it safe with your money might seem wise, but being too conservative can stunt your financial growth. Keeping all your savings in a low-interest account means your money loses value to inflation over time. Smart financial habits include learning about investing and taking calculated risks that align with your goals. Even small investments in index funds or retirement accounts can make a big difference.

6. Making Only Minimum Payments

Paying just the minimum on your credit cards or loans might keep you in good standing, but it’s a surefire way to stay in debt for years. Interest piles up, and you end up paying far more than you borrowed. Make it a habit to pay more than the minimum whenever possible. Even a small extra payment each month can significantly reduce your debt and save you money in the long run.

7. Not Tracking Your Spending

Many people think they have a good handle on their finances without actually tracking where their money goes. This financial habit can lead to overspending and missed opportunities to save. Use a budgeting app or a simple spreadsheet to monitor your expenses. When you see the numbers in black and white, it’s easier to spot problem areas and make adjustments.

8. Putting Off Retirement Savings

It’s easy to think you’ll start saving for retirement “later,” especially if money is tight now. But waiting can cost you big time, thanks to the power of compound interest. The earlier you start, even with small amounts, the more your money can grow. Make retirement savings a non-negotiable part of your financial habits, no matter your age or income.

9. Equating Frugality with Financial Success

Being frugal is often praised, but pinching pennies alone won’t make you wealthy. True financial success comes from a combination of smart spending, strategic investing, and growing your income. Don’t let frugality become an excuse to avoid learning new skills, negotiating your salary, or seeking better opportunities. Focus on building habits that increase your earning potential and help your money work for you.

Rethink Your Financial Habits for Real Wealth

Breaking free from poor financial habits isn’t about working harder or depriving yourself—it’s about working smarter. Focusing on the financial habits that matter, you can build a foundation for lasting wealth and security. Step back, evaluate your routines, and make intentional changes that align with your long-term goals. Your future self will thank you.

What financial habits have you changed that made the most significant difference in your life? Share your story in the comments below!

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10 Financial Habits That Started in Childhood

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Childhood is where so many of our lifelong patterns begin, and financial habits are no exception. Think back to your earliest memories of money—maybe it was a piggy bank, a lemonade stand, or watching your parents pay bills at the kitchen table. These moments might seem small, but they lay the groundwork for how we handle money as adults. Understanding which financial habits start in childhood can help you recognize what you’re doing well and where you might want to make a change. Whether you’re a parent hoping to set your kids up for success or someone looking to break old patterns, knowing the roots of your financial habits is a powerful first step.

1. Saving Spare Change

One of the most common financial habits that starts in childhood is saving spare change. Remember dropping coins into a piggy bank or a jar? This simple act teaches the value of saving, patience, and delayed gratification. Kids who learn to set aside a little at a time often grow into adults who understand the importance of building an emergency fund or saving for big goals. If you’re a parent, encourage your child to save a portion of any money they receive, whether it’s from chores, gifts, or allowances.

2. Earning Through Chores

Getting paid for chores is often a child’s first experience with earning money. This habit instills a sense of responsibility and the connection between work and reward. When kids see that effort leads to income, they’re more likely to develop a strong work ethic and appreciate the value of a dollar. As adults, this translates into understanding the importance of earning, budgeting, and not taking money for granted.

3. Budgeting with Allowance

Many children receive a weekly or monthly allowance, and how they manage it can set the tone for their future financial habits. Learning to budget—deciding how much to spend, save, or give—teaches kids to make choices and prioritize needs over wants. Adults who budgeted as kids are often more comfortable tracking expenses and sticking to a spending plan. If you want to help your child develop this skill, try giving them a set amount and letting them make their own spending decisions, with gentle guidance along the way.

4. Setting Financial Goals

Setting goals, like saving up for a new toy or a special outing, is a financial habit that often starts young. Goal-setting helps children learn to plan ahead and stay motivated. This habit carries over into adulthood, where setting financial goals—like buying a home or saving for retirement—becomes essential. Encourage your child to write down their goals and track their progress, celebrating milestones along the way.

5. Learning from Parental Example

Children are always watching and pick up financial habits by observing how adults handle money. Whether it’s seeing you pay bills on time, use coupons, or discuss financial decisions openly, these lessons stick. Modeling positive financial habits is one of the most effective ways to teach kids about money. If you want your child to develop healthy financial habits, let them see you making smart choices and talk about why you do what you do.

6. Understanding the Difference Between Needs and Wants

Distinguishing between needs and wants is a crucial financial habit that often starts in childhood. When kids learn that some things are essential (like food and clothing) and others are optional (like toys and treats), they’re better equipped to make wise spending decisions later in life. This understanding helps prevent impulse buying and encourages thoughtful consumption. Try involving your child in family shopping trips and discussing why you choose certain items over others.

7. Practicing Generosity

Giving to others—whether it’s donating to charity, sharing with friends, or helping a family member—can become a lifelong financial habit if it starts early. Generosity teaches empathy, gratitude, and the joy of helping others. Adults who practiced giving as children are often more charitable and community minded. Encourage your child to set aside a portion of their money for giving and talk about the impact their generosity can have.

8. Avoiding Impulse Purchases

Learning to resist the urge to buy something immediately is a financial habit that pays off for a lifetime. Kids who are taught to wait before making a purchase—maybe by using a 24-hour rule or saving up for something special—develop self-control and better decision-making skills. This habit helps adults avoid debt and make more intentional purchases. If your child wants something, encourage them to think it over and consider if it’s really worth it.

9. Tracking Spending

Keeping track of where money goes is a habit that can start with something as simple as writing down purchases in a notebook. Kids who learn to track their spending are more aware of their habits and can spot patterns or areas for improvement. This awareness is key for adults who want to stick to a budget or save for big goals. Help your child start a spending journal or use an app designed for kids to make tracking fun and easy.

10. Talking Openly About Money

Open conversations about money are often rare, but they’re one of the most valuable financial habits you can develop. When kids feel comfortable asking questions and discussing money, they’re more likely to seek advice and make informed decisions as adults. Make money a regular topic at home, encouraging curiosity rather than secrecy.

Building Lifelong Financial Confidence

The financial habits we pick up in childhood don’t just shape our bank accounts—they influence our confidence, choices, and overall well-being. By recognizing which habits started early, you can reinforce the positive ones and work to change those that aren’t serving you. If you’re a parent, remember that every conversation and example matters. And if you’re looking to improve your own financial habits, it’s never too late to start.

What financial habits did you learn as a child that still impact you today? Share your stories in the comments below!

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Why the Fastest Way to Wealth Often Requires Zero Talent

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Building wealth is a dream for many, but most people assume it’s reserved for those with rare talents, genius-level intelligence, or a lucky break. The truth is, the fastest way to wealth often has little to do with talent and everything to do with habits, mindset, and consistency. This is great news for anyone who’s ever felt “average” or doubted their abilities. If you’ve ever wondered why some people seem to get ahead financially without any obvious special skills, you’re about to discover their secret. The path to wealth is more accessible than you think—and it’s paved with actions anyone can take, starting today.

Below, you’ll find the real reasons why the fastest way to wealth often requires zero talent. Each step is practical, actionable, and proven to work, no matter where you’re starting from.

1. Showing Up Consistently

You don’t need to be a genius to show up every day. Whether it’s at your job, side hustle, or investment journey, consistency is the foundation of wealth-building. The simple act of being present and putting in steady effort compounds over time, much like interest in a savings account. James Clear, author of Atomic Habits, says small, consistent actions lead to remarkable results. The people who build wealth fastest often refuse to quit, even when progress feels slow.

2. Embracing a Growth Mindset

A growth mindset—the belief that you can improve with effort—always trumps raw talent. People with this mindset see setbacks as learning opportunities, not failures. This attitude is crucial for wealth-building, where mistakes and market downturns are inevitable. Stanford psychologist Carol Dweck’s research shows that those who believe they can grow their abilities are more likely to achieve success. You don’t need talent to adopt a growth mindset; you just need to be open to learning and willing to adapt.

3. Living Below Your Means

One of the fastest ways to wealth is also the simplest: spend less than you earn. This doesn’t require talent—just discipline and self-awareness. Tracking your expenses and making conscious choices creates a gap between your income and spending, which can be invested for future growth. Living below your means is common among self-made millionaires. Anyone can start today by cutting unnecessary expenses and prioritizing savings.

4. Automating Your Finances

Automation is a powerful tool that requires zero talent but delivers massive results. Setting up automatic transfers to savings or investment accounts ensures you pay yourself first, no matter what. This removes the temptation to spend and makes wealth-building effortless. Many financial experts, including Ramit Sethi, recommend automating as much as possible to stay on track. The less you rely on willpower, the more likely you are to succeed.

5. Building Strong Relationships

Wealth isn’t just about money—it’s also about who you know. Building genuine relationships with mentors, peers, and industry professionals can open doors to opportunities, advice, and support. You don’t need talent to be kind, helpful, or a good listener. Networking is about showing up, being authentic, and offering value to others. Over time, these connections can lead to job offers, investment tips, or business partnerships that accelerate your path to wealth.

6. Taking Calculated Risks

While it’s easy to play it safe, the fastest way to wealth often involves stepping outside your comfort zone. Taking calculated risks—like starting a side hustle, investing in stocks, or negotiating a raise—doesn’t require talent, just courage and preparation. The key is to do your homework, weigh the pros and cons, and act decisively. Even if you fail, you’ll gain valuable experience that will serve you in the future.

7. Practicing Patience

Wealth rarely happens overnight. The most successful people understand the power of patience and delayed gratification. This means resisting the urge for quick wins and focusing on long-term goals. You don’t need talent to be patient—just a clear vision and the discipline to stick with your plan. Over time, your efforts will compound, and the results will speak for themselves.

8. Seeking Out Knowledge

You don’t have to be the smartest person in the room to keep learning. The willingness to seek out new information, read books, listen to podcasts, or take courses is a common trait among wealthy individuals. The world of finance is always changing, and staying informed gives you an edge. The best part? Most of this knowledge is free or low-cost; anyone can access it with curiosity and initiative.

9. Setting Clear Goals

Setting specific, measurable goals gives you direction and motivation. You don’t need talent to write down what you want and create a plan to get there. Whether it’s saving for a house, paying off debt, or reaching a net worth milestone, clear goals help you track progress and stay accountable. Review your goals regularly and adjust as needed to stay on course.

Wealth Is a Skill—Not a Gift

The fastest way to wealth isn’t reserved for the talented few. It’s a skill anyone can develop by showing up, staying consistent, and making smart choices. Every step above is within your reach, no matter your background or starting point. Remember, building wealth is less about what you have and more about what you do—day in and day out. Start today, and you’ll be amazed at how quickly your efforts add up.

What’s one “zero talent” habit that’s helped you on your financial journey? Share your story in the comments below!

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7 Harsh Money Truths Every Broke Person Needs to Hear

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If you’re tired of living paycheck to paycheck, you’re not alone. Millions of people struggle with money, but the difference between those who stay broke and those who break free often comes down to facing some uncomfortable realities. It’s easy to blame the economy, your job, or even bad luck, but sometimes the real problem is closer to home. Facing the truth about your financial habits can be tough, but it’s the first step toward lasting change. In this article, we’ll break down seven harsh money truths every broke person needs to hear. If you’re ready for a little tough love and a lot of practical advice, keep reading—your financial future depends on it.

1. No One Is Coming to Save You

It’s a hard pill to swallow, but waiting for a financial rescue—whether it’s a lottery win, a rich relative, or a government program—is a losing strategy. The reality is, your financial situation is your responsibility. While safety nets and support systems exist, relying on them as your main plan will keep you stuck. The sooner you accept that no one is coming to save you, the sooner you can start making changes that put you in control. Start by tracking your spending, setting realistic goals, and taking small steps every day. Remember, financial independence is built, not gifted.

2. Your Income Isn’t the Problem—Your Habits Are

Many people believe that making more money will solve all their problems, but that’s rarely the case. According to a 2023 CNBC report, even high earners can end up broke if their spending habits don’t change. If you consistently spend more than you earn, no amount of income will ever be enough. Take a hard look at your daily habits: Are you eating out too often? Subscribing to services you don’t use? Buying things to impress others? Changing your habits is tough but the only way to break the cycle.

3. Budgeting Isn’t Optional

If you’re broke, you can’t afford to ignore budgeting. A budget isn’t about restriction—it’s about awareness and control. Without a budget, knowing where your money is going or how to make it work for you is impossible. Start simple: list your income, track your expenses, and set limits for each category. There are plenty of free tools and apps to help you get started. The key is consistency. Review your budget every month and adjust as needed. Over time, you’ll gain confidence and control over your finances.

4. Debt Is a Trap—And It’s Up to You to Escape

Debt can feel like quicksand, pulling you deeper every month. Credit cards, payday loans, and buy-now-pay-later schemes are designed to keep you spending and paying interest. According to the Federal Reserve, the average American household carries thousands in credit card debt, and the interest alone can keep you broke for years. The harsh truth? No one is going to pay off your debt for you. Make a plan to tackle your balances, starting with the highest interest rates. Cut up your cards if you have to. Every dollar you pay down is a step toward freedom.

5. You Can’t Out-Earn Bad Money Management

It’s tempting to think that a higher salary will solve everything, but poor money management will sabotage even the biggest paychecks. Many lottery winners and pro athletes end up broke because they never learned how to manage their money. The skills you build now—budgeting, saving, investing—will serve you no matter how much you earn. Focus on mastering the basics before chasing a bigger paycheck. When you do earn more, you’ll be ready to make the most of it.

6. Saving Is Non-Negotiable, Even When You’re Broke

It might seem impossible to save when you’re struggling, but saving is essential—even if it’s just a few dollars a week. An emergency fund is your safety net against unexpected expenses like car repairs or medical bills. Every surprise becomes a crisis without savings, and you’re forced to rely on credit or loans. Start small and automate your savings if you can. Over time, those small amounts add up and give you breathing room. Remember, saving isn’t about the amount—it’s about building the habit.

7. Your Mindset Is Holding You Back

The way you think about money shapes your reality. If you believe you’ll always be broke, you probably will be. Negative self-talk, fear of failure, and a scarcity mindset can keep you stuck in the same patterns. Start challenging those beliefs. Read books, listen to podcasts, and surround yourself with people who have a healthy relationship with money. The more you learn, the more empowered you’ll feel to make changes. Your mindset is the foundation of your financial future—make sure it’s working for you, not against you.

The Power to Change Is in Your Hands

Facing these harsh money truths isn’t easy, but it’s the only way to break free from being broke. Every step you take—no matter how small—moves you closer to financial freedom. Remember, your situation isn’t permanent unless you let it be. Take ownership, build better habits, and believe in your ability to change. The journey might be tough, but the rewards are worth it. You have the power to rewrite your money story, starting today.

What’s the harshest money truth you’ve had to face? Share your story or advice in the comments below!

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Financial Resolutions: Debt, Savings, Investing, Real Estate, and Crypto

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The new year is right around the corner so I thought it fitting to layout some resolutions for a few different financial topics. Here are financial resolutions for crypto, investing, real estate, savings, and debt.

Debt

Pay down or pay off your debt. If you have credit card debt, make it a goal for next year to pay it off completely. The interest rates that credit card companies charge are so brutal. Getting rid of credit card debt would relieve a lot of stress and save you a lot of money that you’re wasting on interest. Not to mention, whatever you’re currently paying towards your credit card can be used for something way more productive.

If all you have is a mortgage, make extra payments. If you have no debt, congratulations! Try and save more so there’s no chance of you going into debt again.

Savings

Would you like to buy a house next year? Save for your down payment. The bigger your down payment is the smaller your responsibility will be; in terms of monthly payments and in terms of total money owed. Especially if your down payment is 20% or more. If that’s the case, you don’t have to pay mortgage insurance (AKA PMI).

If a down payment isn’t something you need to save for, increase your savings rate for retirement. Or set yourself up to cover some unexpected expenses by creating an emergency fund. Do some math, establish a goal number (emergencies, down payment, retirement savings), and then create a plan to save and hit that number.

Investing

For the most part, investing will take place in your retirement account. And for most people, the amount of time you have until retirement is a couple of decades. With that said, you can be a little more aggressive with your investments.

If this description doesn’t fit you, then figure out what works for you. Determine your time horizon, risk tolerance, and what you’d be able to tolerate in terms of short-term losses. If you’d like to get a good idea about what your preference is, take our risk tolerance quiz.

Real Estate

This one is a little challenging because it’s not like you’re going to move once per year. Also, investing in real estate isn’t for everyone. So I’m going to try and hit a few groups with this one.

Buy a new home. If you need more space for your growing family, you got a new job that requires relocation, you want to be closer to your church or family members, then make a move.

Make improvements to your current home to increase the value of your home or to make better use of the space. It can also improve tax credits especially if you use sustainable materials like solar panels. Either way, the improvement has a positive effect on your living situation.

Most people can invest in real estate, they just do it differently. Some people are going to invest in physical properties and some can invest in Real Estate Investment Trusts (REIT). Either way, you need to be picky (like all investments) so you get a good return on your money.

Crypto

This applies to everything in this post, but especially here…do your homework. I like crypto. I think there are investment opportunities, but I also think there’s a possibility it all collapses. I like the technology it’s created on, but I don’t know how it’ll transform and what the adoptability will be. Invest only what you can afford to lose is my best advice. With all that said, make financial resolutions to get more educated about cryptocurrencies and the blockchain.

Related reading:

8 Ways to Improve Your Retirement Savings in 2018

Diving Deep into Debt

Worthy Goals to Set and Crush

How to Invest in Cryptocurrency: A Guide for Beginners

Relocating Without A Job? Here Are 10 Tips

Disclaimer:

**Securities offered through Securities America, Inc., Member FINRA/SIPC. Advisory services offered through Securities America Advisors, Inc. Securities America and its representatives do not provide tax or legal advice; therefore, it is important to coordinate with your tax or legal advisor regarding your specific situation. Please see the website for full disclosures: www.crgfinancialservices.com

What Should I Do With the Next Stimulus Check?

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With the new COVID relief bill passed by Congress and signed by President Joe Biden. Many Americans have stimulus checks on the way if they aren’t already in hand. However, figuring out what to do with the money can be surprisingly tricky. Particularly if you have some conflicting needs. Luckily, it is possible to choose the best path for you. If you aren’t sure where to begin. Here are some options for what to do with the next stimulus check.

Handle an Urgent Need

If you have an urgent financial need, such as issues buying enough food for your household or past-due utility bills, using your stimulus check to handle those costs is your best bet. It ensures you can continue to live without undue hardship, and that’s important during this pandemic recovery period.

Additionally, if you have secured debt – like an auto loan – and you’ve fallen behind on payments, putting the asset at risk of seizure, it may be a solid target. By catching up, you may be able to avoid the repossession or foreclosure. Depending on the asset involved, that might be crucial.

However, before you send stimulus money toward any bill, you may want to see if there are other programs available that may reduce that burden. For example, utility companies, mortgage lenders, certain state or county offices, and many other organizations have relief programs to help those who are struggling due to the pandemic. If you’re eligible for their assistance, don’t hesitate to use it. Then, you can direct your stimulus check toward other needs.

Pay Your Taxes

If you have filed (or are about to file) your federal taxes and owe money to the IRS, using your stimulus check to handle that burden isn’t a bad idea. Unlike for the 2019 tax year filings, the IRS isn’t postponing 2020 tax filings this year. If you want to avoid fees and interest, then you need to pay what you owe in full by April 15.

Even if the stimulus check only covers part of your obligation, using it to handle some of your taxes reduces this total burden. Then, if you need to enter into a payment plan with the IRS to address the rest, what you’ll need to pay could be easier to shoulder.

Create an Emergency Fund

If you don’t have any cash – or very little money – set aside in an emergency fund, using your stimulus check to get one started is a good idea. It’s wise to have a little cash available for unexpected events, something that the pandemic made abundantly clear for many.

Ideally, you want at least $1,000 set aside initially. Then, you can work your way up over time, aiming to save a minimum of three to six months’ living expenses.

Pay Down High-Interest Debt

Using your stimulus check to tackle high-interest debt is always a good idea. Not only will it reduce the amount of money you’ll pay over the life of the debt, but it could potentially boost your credit.

For many people, starting with high-interest credit cards is the best way to go, especially if the cards are close to being maxed out. However, for others, a high-interest personal loan could also be a good target.

Finally, if you have a payday loan, focusing on that might be your ideal option. Payday loans usually come with astronomical interest rates, making them a wise debt to tackle with stimulus money.

Boost Your Retirement Savings

By using your stimulus check to boost your retirement savings, you not only do something to help secure your financial future, but you may also get a tax benefit. You have until April 15, 2021, to finish up your 2020 retirement investing. If you contribute your stimulus to a tax-advantaged account, you might be able to lower your 2020 tax burden.

However, you can also use the money for your 2021 retirement savings. You may be able to get a jump start on it or even fully fund an IRA, depending on how much you receive in your stimulus check.

Handle a Large Purchase

If you have a solid emergency fund, fully funded retirement accounts, no high-interest debt, and have your financial house otherwise in order, then using your stimulus check for a large purchase is certainly an option. It may give you the ability to buy high-cost items in cash, allowing you to potentially avoid high-interest debt.

Even using stimulus money to fund a vacation can be a smart move if you’re in good financial shape otherwise. Again, it lets you avoid the need for debt and could give you something fun to look forward to once you feel comfortable traveling.

Invest, Invest , Invest

If you want to put your stimulus check to work but already have a fully-funded retirement account, then you could always invest separately. There are many options that can help people get started, including full-service brokers, robo-advisors, and anything in-between.

You will need to do some research if you don’t currently have an investment account, ensuring you choose the right brokerage for you. Additionally, if you aren’t sure where to invest the money, you might need professional guidance or to conduct more research.

In many cases, focusing on individual stocks isn’t wise for beginners. Instead, options like index funds may be a better bet, as they come with an innate level of diversification.

Save Money for College

Whether you have children or may go back to college yourself, setting your stimulus check aside in a 529 college savings plan could be a smart move. It lets your money grow tax-free, and any withdrawals you make for qualifying expenses aren’t taxed either. In the end, this option can help make college more affordable, allowing you or your child to potentially avoid or reduce the need for costly student loans.

Do you already have plans for your next stimulus check? Share your thoughts in the comments below.

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How to Utilize Rewards

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On this site, we talk about credit, investing, and how to pay off debt. One thing that’s often missed around the debt subject is rewards.

Rewards are incentives to keep going. It’s something we can use to motivate us on our journey, no matter what that journey is.

Whether we are trying to pay off debt, lose weight, or just, straight up, improve our life. You need to reward yourself, otherwise, it’s go go go, all the time.

In this article, we’ll talk about when it’s a good time to reward yourself, how, and things to look out for.

Habits

A reward should be centered around two things. Habit formation or commitment, and goals.

If you are trying to make an improvement on something, whether it’s your health or your finances, you have to develop good habits.

If you want to exercise more, do it six days in a row, then take a break. That break can be your reward. If you want to eat better, do it for six days and then take a little break with a cheat meal.

The first step is creating the habits to get yourself to that better place.

Goals

The next reward will come when you hit goals. You want to get to a certain place, say saving $20,00 for a down payment, eliminating your debt, or losing 20 pounds.

Those are great goals, but you should put in place incremental ones to help you get there. That could be a reward for every $5,000 saved, every $5,000 paid down, or every 5 pounds lost.

It’s a lot like Dave Ramsey’s “Snowball Method” with applications in different areas of life. The goal with that method is to give you small wins to keep you motivated.

How to reward

If you put those habits in place and hit those goals, it’s time for the reward. The great, but the challenging part about that is everyone defines reward differently.

So when you create a reward for yourself, you should keep two things in mind. Make sure it’s good enough to release some dopamine, but small enough that it doesn’t set you back on what you are trying to accomplish.

If you’re trying to lose weight, your reward should be a little cheat meal or a day off from working out. Not a day of binge eating or a week without breaking a sweat.

If you’re trying to save money or pay down debt, don’t let whatever the reward is negate you from saving that month or add to your debt.

Large enough to make you feel good, but small enough so you stay on course.

What to watch for

The biggest thing to watch for is the size/duration of the reward. It mustn’t be too big or too small.

It’s a fine line and may require a little trial and error before you get it right. Start small and work your way up.

As I mentioned, it shouldn’t detract you from the pursuit of your goals, but it should also make you feel good about the progress that you’ve made or the habits you’ve created.

How I handle rewards

I won’t lie to you, rewards are a challenge for me. I’m very much a black and white type of person.

I keep junk food out of the house because I can’t be tempted with it. I make regular transfers from checking to savings in order to keep “discretionary money” out of my bank account for fear of spending it away (mostly on take-out, honestly).

It’s hard for me to put the pedal to the floor and take it off for a day. I’m either all on or all off, but I’m starting to figure it out. It really just takes some practice, a little will power, and some self-awareness.

Related Reading:

The Psychology of Money

Diving Deep into Debt

Money Anxiety

My Life and How I Manage Stress