10 Big Money Mistakes Keeping You From Being Wealthy (#6 Is Lurking Right Now)

If you want to stop living paycheck to paycheck and build real wealth, you'll need to make smart financial decisions and avoid making mistakes that will impact your financial goals.

Fortunately, it’s never too early or too late to make wise financial decisions. You can grow your wealth much faster by not falling victim to these financial traps.

Trying to keep up with the Joneses

Vasyl/Adobe

When you try to keep up with the spending habits of others, you're essentially spending money on things you didn’t want in the first place.

Chances are no one else cares if your home has all the same features as your neighbors’ or if you have the latest smartphone. But making these unnecessary purchases will likely cause regret later.

Rather than using your financial resources to keep up with the Joneses, lower your financial stress by saving as much as possible. That way, you can keep up with the cost of living in the years to come.

Buying too much house

dbvirago/Adobe

Bigger homes cost more to purchase, which means you’ll pay more initially, but you’ll also face higher ongoing costs for as long as you live in one.

With more space to heat or cool, you can expect to pay more in utility costs. Homeowners' insurance and property taxes will also probably cost more.

Buying a house that is the right size for you and your family will provide you with more money to save or for doing the things you enjoy. Throwing money away every month on rooms you never use isn’t a good move for growing your wealth.

Buying vehicles you don’t need

VladFotoMag/Adobe

SUVs and trucks are popular vehicle options, but many people purchase them for features they’ll never use. Off-road capabilities don’t matter when you only drive on main roads, and these vehicles will keep costing you money.

A lot of SUVs and trucks do not perform with good gas mileage, so you’ll spend more time and money filling up at the pump. All that extra money you’ll pay for gasoline could go toward other expenses, like your car payment or car insurance.

Not looking for higher income opportunities

Drazen/Adobe

It’s hard to save money when you don’t make much of it to begin with. Looking for higher income opportunities will allow you to save more and sacrifice less.

Even if you already make decent money, bringing home larger paychecks will allow you to grow your savings even faster.

If you can’t increase your regular salary, there are ways to make extra money . You can pick up a side job, look for passive revenue streams, or ask for a raise. Obtaining more training or a better degree is also an option for landing higher-paying jobs.

Accumulating debt

Shisu_ka/Adobe

When you borrow money — whether it’s a mortgage or a credit card — you'll be paying interest on the loan. This is money you are throwing away each month, especially if it’s credit card interest.

The more debt you have, the longer it will take you to pay it off. This can prevent you from growing your savings as quickly as you’d like.

Don't carry debt you can’t afford to pay back, choose low-interest credit cards, make payments on time, and don’t swipe your credit card every time you make a purchase.

Fall victim to lifestyle inflation

Jelena/Adobe

If you’ve started making more money, it’s sometimes easy to start spending the difference. After all, you can afford nicer things. But spending the extra money on non-essential items conflicts with your goal to increase your wealth.

Using the money you’ve gained from a raise or a better-paying job to secure your financial health is a better option than spending it. You now have more money to save, invest, and plan for your future.

Pro tip : Inflation is real and can really hurt you in a number of ways as you age. It's important to prepare yourself financially in case inflation leads to a future recession. Your future self will thank you.

Not maxing out employer contributions

Vitalii Vodolazskyi/Adobe

Saving for retirement is much easier when your employer matches your contributions to your 401(k). You can grow your savings with money that doesn’t need to come out of your wallet. Take advantage of employer-matched accounts by maxing them out.

To be sure you earn your employer contributions, you need to know the maximum your employer will match. Many employers base this amount on a percentage of your income.

Once you know the amount your employer will match, you can start getting as much free money as possible.

Waiting to start saving

lovelyday12/Adobe

You don’t want to wait until retirement approaches to start saving. It’s never too early to start and grow your savings accounts. Saving the amount you’ll need to live comfortably throughout retirement isn’t easily accomplished in 10 or 20 years.

Social Security won’t replace your pre-retirement income, and you'll need to account for inflation. But it’s not just retirement you need to save for.

Having an emergency savings account is important in the event you lose your job or face a large and unexpected expense.

Letting your money sit

Seventyfour/Adobe

Letting all your money sit may not result in more of it. But you can take steps to grow your wealth with the money you already have.

Rather than keep your money in a traditional savings account, which pays a low interest rate, you can open a high-yield savings account that allows you to earn money just by keeping it there.

Investing is another option for making money using your current funds. Investing in financial instruments like mutual funds may provide returns that can help secure your financial life once you exit the workforce.

Grow Your $$: 11 brilliant ways to build wealth after 40

Not making smart investments

Yingyaipumi/Adobe

While making investments is a good step for increasing your wealth, you need to make the right ones. Making bad investment decisions could cause you to lose your initial investment.

Experts recommend assessing your risk tolerance before making decisions, but there are things you can do to reduce your investment risks.

Diversifying your portfolio by investing in different types of assets will prevent a single bad investment from impacting your entire investment portfolio.

Bottom line

Iryna/Adobe

Knowing what you shouldn’t do to obtain wealth is just as important as knowing what you should do. If you find yourself making any of these mistakes, you can take steps to make better decisions now. None of these actions is irreversible.

You can find smart ways to crush your debt if you’ve acquired too much or contribute more to your 401(k) if you’ve been missing out on free money.

The sooner you start doing the right things, the faster you can increase your wealth.

More from FinanceBuzz:

Make Money: 7 things to do if you’re barely scraping by financially.