10 little habits that are holding you back from building real wealth, according to psychology

Building wealth isn’t just about dollars and cents. It’s about habits, mindset, and behavior. Psychology tells us that certain habits, some so small we barely notice them, can keep us from achieving financial success.

We always tell ourselves that we’ll start saving more, investing smarter, and being more financially responsible. Yet, we often find ourselves stuck in the same financial rut. Why is that?

The answer may be found in the subtle routines we perform daily without even realizing it. These seemingly insignificant habits can have a big impact on our financial trajectory.

In this article, I’m going to share 10 little habits you might be guilty of which are actually holding you back from building real wealth.

It’s time to acknowledge these habits and make the necessary changes to chart a course towards financial prosperity.

1) Procrastinating on financial decisions

Procrastination – we’ve all been guilty of it at some point. But when it comes to wealth building, delaying financial decisions can be a major roadblock.

It’s easy to push off making important money moves. Maybe you’re waiting for the “perfect” time to invest, or perhaps you’re avoiding confronting your debt because it’s too overwhelming.

Unfortunately, ignoring these tasks doesn’t make them disappear. Instead, it tends to make the situation worse.

Famed psychologist Dr. Joseph Ferrari, a leading expert on procrastination, once said, “Everyone procrastinates, but not everyone is a procrastinator.”

It’s a subtle reminder that while we all might fall into the trap of delay and avoidance occasionally, the key is not to make it a habit.

By taking prompt action on your financial tasks and decisions, you’re setting the stage for long-term wealth building.

It’s time to ditch the ‘I’ll do it tomorrow’ mindset and start making proactive financial decisions today.

2) Not setting clear financial goals

Setting clear, actionable financial goals is a cornerstone of wealth building.

Without them, you’re like a ship without a compass, drifting aimlessly in the vast ocean of financial possibilities.

I learned this the hard way. A few years back, I was earning a decent income but I wasn’t really saving or investing. My finances were in a state of flux and I didn’t really know where my money was going.

It was only when I sat down and outlined my financial goals that I started to see progress.

I began by setting small, achievable targets like saving a certain amount each month, and gradually worked up to larger objectives like investing in a retirement fund.

This clarity not only made me more accountable but also motivated me to work harder towards my financial aspirations.

As Carl Jung, the famous Swiss psychiatrist and psychoanalyst, once said, “Your vision will become clear only when you can look into your own heart.”

This is true not just for self-discovery, but for financial discovery as well.

Setting clear financial goals allows you to understand your own financial heart, guiding you towards wealth creation and prosperity.

3) Falling prey to lifestyle inflation

Lifestyle inflation is a silent wealth killer. It’s that sneaky habit of increasing your expenses as your income rises.

I’ve seen it happen more times than I care to admit. You get a raise or a bonus, and suddenly that compact car isn’t good enough anymore, or that budget-friendly apartment doesn’t cut it.

Before you know it, you’re spending more than you earn, all in the name of keeping up appearances.

Sigmund Freud, the father of psychoanalysis, once said, “We are never so defenseless against suffering as when we love.” In this context, our ‘love’ for a grander lifestyle can leave us defenseless against financial suffering.

Wealth isn’t about how much you earn—it’s about how much you keep.

Resisting the urge to inflate your lifestyle with every pay increase can significantly boost your wealth-building efforts.

4) Neglecting to negotiate

Negotiation might seem intimidating, but it’s one of the most powerful tools in your financial toolbox.

Whether it’s your salary, the price of a new car, or the interest rate on a loan, a little negotiation can save you a lot of money in the long run.

I used to be one of those people who just accepted the first offer thrown my way. Until one day, I found myself in a situation where I had to negotiate to avoid overpaying for a used car.

To my surprise, the seller agreed to my proposed price. That experience taught me that negotiation isn’t just for business moguls—it’s for anyone who wants to take control of their financial destiny.

As renowned psychologist Albert Ellis once said, “The best years of your life are the ones in which you decide your problems are your own…You do not blame them on your mother, the ecology, or the president. You realize that you control your own destiny.”

Negotiation is about taking control and asserting your financial worth. Don’t shy away from it.

The next time you’re faced with an opportunity to negotiate, remember that every dollar saved is a dollar earned towards your wealth-building journey.

5) Ignoring small expenses

We often focus on the big-ticket items when trying to save money, while ignoring the small, recurring expenses.

But it’s these little costs that can slowly eat away at your wealth without you even realizing it.

I used to think that my daily gourmet coffee or the occasional online sale splurge wouldn’t put a dent in my finances.

But when I started tracking my expenses, I was shocked to see how much these ‘small’ purchases were adding up to over time.

Renowned psychologist Daniel Kahneman once said, “We can be blind to the obvious, and we are also blind to our blindness.”

This applies perfectly to our tendency to overlook small expenses. We’re not just oblivious to their cumulative impact, but also to our obliviousness itself.

Building wealth is not just about making more money, but also about being mindful of where your money is going – even if it’s just a few dollars at a time.

6) Avoiding financial risks

Risk is often viewed as a negative factor in wealth creation, but the truth is, avoiding financial risks can actually hinder your journey to financial prosperity.

Smart risks, like investing in a promising startup or diversifying your investment portfolio, can yield significant returns.

Too often, we let fear dictate our financial decisions.

But as the famous psychologist Abraham Maslow pointed out, “In any given moment we have two options: to step forward into growth or step back into safety.”

Taking measured financial risks is stepping forward into growth. It’s about embracing uncertainty and making informed decisions that have the potential to multiply your wealth.

Don’t let fear hold you back from taking the financial leaps that could lead you closer to your wealth goals.

7) Letting emotions control your financial decisions

Emotions and money are a dangerous mix. When we let our feelings dictate our financial decisions, we’re likely to make choices that aren’t in our best financial interest.

I remember when I made my first investment. I was so excited about the potential returns that I overlooked the risks. Needless to say, it didn’t end well.

That experience taught me a valuable lesson: emotions have no place in financial decision-making.

As the renowned psychologist Carl Rogers once said, “The only person who is educated is the one who has learned how to learn and change.”

Learn from your past financial mistakes, change your approach, and start making objective, well-thought-out financial decisions that align with your wealth-building goals.

8) Failing to invest in yourself

The greatest investment you can make is in yourself. Yet, so many of us neglect this crucial aspect of wealth building.

We’re so focused on saving and investing money that we forget to invest in our own skills and knowledge.

I was once guilty of this, too. I’d save every penny and invest it, but I wouldn’t think twice about neglecting a course or a book that could enhance my skills or knowledge.

It took me a while to realize that investing in myself could yield far greater returns than any stock or bond.

As the famous psychologist B.F. Skinner said, “Education is what survives when what has been learned has been forgotten.”

Your skills and knowledge are your most valuable assets. They’ll stay with you even when your money is gone.

Investing in yourself is not just about spending money on education or personal development. It’s also about taking time to nurture your physical and mental health.

Start investing in yourself today, because you’re worth it.

9) Being overly frugal

Frugality is often praised as a virtue in wealth building.

Being overly frugal can actually hinder your path to financial prosperity. When you’re too focused on pinching pennies, you may miss out on valuable opportunities to make more money or enjoy life.

Psychologist Abraham Maslow once said, “If the only tool you have is a hammer, you tend to see every problem as a nail.”

If frugality is your only financial strategy, you might overlook other effective ways of building wealth, like investing, networking, or starting a side business.

Wealth isn’t just about saving every cent you earn—it’s about finding a balance between saving, spending, and investing.

Don’t let excessive frugality limit your financial growth and personal happiness.

10) Dismissing the importance of financial literacy

Financial literacy is the bedrock of wealth creation. But it’s surprising how many people dismiss its importance.

I had a friend who once said to me, “I’m not a finance person, I’ll never understand all these investment terms and strategies.”

But here’s the thing – you don’t have to be a financial whiz to understand the basics of money management.

Famed psychologist Howard Gardner introduced the concept of multiple intelligences, suggesting that our intelligence isn’t limited to just math and language skills but spans across various domains, including interpersonal and intrapersonal skills.

Applying this concept to financial literacy, we can say that just as we all have the ability to develop our interpersonal skills, we can also develop our financial intelligence.

Knowledge is power.

By taking the time to educate yourself about personal finance basics, you’re empowering yourself to make informed decisions that can dramatically improve your financial health and bring you closer to your wealth goals.