5 Things Financially Successful People Don’t Do With Their Money, According To A Financial Coach
What you don't do with your money is actually equally important to what you do.
BongkarnGraphic | Shutterstock What you choose to do with your money is important. However, how often do you think about what you don’t do with your money? We tend to get so caught up with what we’re doing with our money that we often forget to consider the things we aren’t doing and how they affect our financial well-being. One financial coach said both are “just as important” as the other.
Michela Allocca is a financial coach and the creator of Break Your Budget, a personal finance advice brand that has hundreds of thousands of followers on both Instagram and TikTok. In a recent Instagram post, she shared the five things she never does with her money that have helped her become extremely wealthy by the age of 29.
Here are five things financially successful people don’t do with their money:
1. Forget to make returns
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We’ve all been there. You buy something that doesn’t fit or isn’t the right color or just doesn’t work, and once you find out, you vow to return it as soon as you can … and then you find it sitting at the bottom of your closet weeks later, way past the return window. This is something Allocca never lets happen. She said if she doesn’t “absolutely love it,” she returns it, even “if it’s annoying or if I have to pay a fee.”
It’s easy to talk yourself out of returning something, because what if you change your mind about it or you do need it at some point? It’s not worth it, Allocca advised. She thinks you should only keep things that are perfect for you or that you love, and she’s right. Holding onto things you won’t use is a waste of money. Even if you have to pay for the return, it will still be less than the full cost of the item that you’ll get back.
2. Use a regular savings account
There’s nothing inherently wrong with traditional savings accounts, and saving some money is always better than saving none. But, Allocca said high-yield savings accounts are a better choice. She called regular old savings accounts “a complete waste,” while high-yield savings accounts let you “earn as much interest as possible at all times” with the money you were going to keep in the bank anyways.
Writing for CNBC Select, Andreina Rodriguez and Elizabeth Gavier said that these “accounts give you a higher rate of return on your deposits,” and are also a safer option than most investments. Nothing is perfect, though, and high-yield savings accounts aren’t without their disadvantages. “While you can grow your money with a high-yield savings account, it’s not the best way to generate long-term wealth for retirement because the yield often doesn’t keep up with inflation,” they noted.
3. Use a debit card all the time
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Again, if your debit card is all you have on hand, you’ve got to do what’s necessary. But paying with a credit card is better, Allocca said. “I want every purchase I make to be stretched as far as it can possibly go, so I take advantage of cash-back and travel rewards cards,” she explained. There is one important catch to keep in mind, though. “Obviously, I pay them off in full every month,” she shared. “No exceptions ever!”
Personal finance website NerdWallet recommended paying with a credit card in all situations. Writing for the outlet, Virginia C. McGuire pointed out that credit cards are actually more protected than debit cards and give you more opportunities for rewards. Also, contrary to popular belief, using them does not mean you have to go into debt. Just don’t spend beyond your means and pay them off every month like Allocca does and you’ll be good to go.
4. Use sales as an excuse to buy things
Who doesn’t love to hit up a good sale? Often, you’ll find things you didn’t even know you needed. And that, Allocca said, is the problem. “If something I have been needing and wanting goes on sale, I will take advantage of the discount,” she shared. “But a sale is never a catalyst for me to purchase something I wasn’t already planning to buy.”
When something is on sale, it’s easy to justify buying it. After all, when will you see it at this price again? But if you don’t really need it, or if you didn’t even want it before the discount, is it really a good deal? Definitely use sales to get what you need for less, but don’t use them as an excuse to buy all kinds of unnecessary things that you’ll end up regretting (and not using) later.
5. Not tracking your expenses
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Tracking your expenses sounds tedious and time-consuming — not exactly anyone’s idea of fun. Be that as it may, it’s absolutely essential for your financial well-being. Allocca, who has been tracking her finances for five years now, said, “Knowing your numbers is the most important thing you can do for your money.”
As Rebecca Lake wrote for SoFi, “Once you know where your money is going, you can decide if this is actually where you want your money to go. You may find places where you’re wasting money and decide to rejigger your spending so you can put more money towards your goals, whether that’s paying down debt, going on vacation or being able to retire one day.” Knowing where your money is going can completely change the way you spend it, but you’ll never know if you don’t keep track.
You don’t have to be an expert to reach financial success.
While Allocca is an expert as a financial coach, you don’t have to be in the same position to improve your financial well-being or achieve success with your money. It’s possible for absolutely anyone, as long as you’re willing to be disciplined and do what’s really best for your finances, even when it’s hard.
Mary-Faith Martinez is a writer with a bachelor’s degree in English and Journalism who covers news, psychology, lifestyle, and human interest topics.