15 Signs You Have No Control Over Your Money
Some people get to a point where they make enough money to support themselves, but then they adopt a series of habits that yo-yo them right back into being broke. This video is about them, and who knows, maybe you too, so pay attention. Welcome to A Lux.
Number one: Impulsive spending. The first thing people do who start to make more money is to spend it on [__] they don't need. They look at their bank account and they see they have more money left over than they used to have, which instantly prompts the question, "Okay, what do I buy with this?" They get into the habit of buying every new and shiny thing that drops just to feel good inside. The new iPhone dropped? Instant pre-order! They don't even know what it does; they just know it's new. A new fashion collaboration is announced? Better cop that to be the freshest one on the subway. Impulsive spending is the first sign that shows someone has no control over their money.
Number two: Financial liabilities. There are five big financial liabilities that people get themselves into: mortgage, student loans, car loans, credit card debt, and personal loans. And while the first two maybe not everyone can avoid, or they're already into them, the last three are what people really get trapped on. As a rule of thumb, you should never spend money you don't have. As a second rule of thumb—because you've got two hands—just because you have the cash to buy something doesn't mean you should. This second one is what most people struggle with because it requires holding back and being disciplined. Just because you can afford a new whatever doesn't mean that you should buy it, especially since that new thing comes with a monthly payment attached to it.
Number three: You don't know how much life costs. When you have no control over your money, you have no idea where it all goes. You don't know how much you pay for food in a month. You don't know how much you spend on clothes in a year. You don't even know how many subscriptions you have. Money just seems to fly away, and you have no idea. You think life is getting more expensive, but you can't name a single thing that's more expensive now than it was two years ago.
Number four: You have lifestyle inflation. Lifestyle inflation means your cost of living goes up with your monthly earnings. No matter how much money you earn, you always have the same amount of money left at the end of the month. As you earn more money, you start to adopt a more expensive lifestyle. You buy more expensive clothes, you pay more for food, and keep looking for that exclusive experience. But your life fundamentally stays the same. Nothing changes at an individual level. You don't invest in experiences that make you better; you invest in things that make you look more successful. Soon enough, you find yourself in a circle of debt and financial stress.
Number five: You have zero savings. People who have no control over their money cannot stand to see money collecting dust. They feel a deep urge inside to spend it. In their eyes, money saved is money not spent. They will justify it with things like, "I'll have no use for money when I'm gone," but they fail to see that savings has a different purpose. You don't save money to get rich. Nobody in the history of the world ever saved their way into wealth. Actually, you know what? On the Alux app, we've got a learning pack dedicated to the principles of building wealth, and saving isn't on that list. Instead, you save money to give yourself a financial cushion that doesn't affect your cash flow and to give you room to grab opportunities when they arise.
Number six: You live paycheck to paycheck. This isn't a poor people thing; this is an anyone who's bad with money thing. People who have no control over their money always find a way to lose it all. From lifestyle inflation, as we already mentioned, to poor budgeting, no overview on their financial situation, and sometimes because of plain ignorance, the money seems to just fly away every month. God forbid an emergency shows up.
Number seven: You constantly borrow. When people are bad with money, they feel like spending money that's not theirs is different than spending their own, even though they have to pay it back later plus interest. You get things you don't need with money you don't have and think you'll figure it out later. This makes you irresponsible and ignorant. You overestimate the cost of living because you don't keep track of anything, so you end up living way beyond your means while borrowing the rest to make ends meet. It’s a never-ending cycle.
Number eight: You lack financial education. You've never opened up a financial book in your life. You've never asked your rich friends to show you how they organize their finances. You don't know how banks work; you don't know how credit cards work. It's all a mystery. As a matter of fact, there's a study that showed that half of Americans with a credit card have no idea what their annual percentage rates are. You always feel like you're one missed paycheck away from disaster. All that talk about credit cards and bills and loans overwhelms you. You actually click on all that financial advice that bots are spamming in the comments on YouTube videos. By the way, it goes without saying here: Don't fall for the scams on YouTube comments. Since this video is about money, the comment section is going to be flooded with scammers.
But now back to the point. Lucky for you, we've got a whole lot of videos where we talk about money. So if you don't know where to start, start here.
Number nine: You borrow money to pay other debts. Now speaking of debt, you know someone has absolutely no control over their money when they start borrowing to pay off other debts. At that point, they're in over their heads, and the only way out they see is diving even deeper into the rabbit hole. These are people who are juggling maxed-out credit cards, hoping to stay above the surface. It goes without saying that controlling your money involves clearing out your debt without making new debt in the process.
Number ten: You are embarrassed by your financial situation. You hate the money talk. It makes you uncomfortable and uneasy when someone talks about investments. You panic; you don’t want to hear about it because you feel like you're put on the spot for not having any. You don't want people to know how random your financials are, so you keep them hidden. But this also blocks you from getting help or advice from other people. There is an actual term for this; it's called the ostrich effect. You avoid negative information, including feedback and advice. It's human nature to do so, but it only makes your financial situation even worse.
Number eleven: You don't understand the difference between broke and poor. Being broke means you don't have any money; being poor means you don't have a way of making money. And there's a big difference. But when you have no control over your money, they feel the same. You don't manage to get past the broke mentality, and you end up doing all of the things that keep you broke.
Number twelve: You have no long-term financial goal. When you have no control over your money, you have no control over your financial future. Retirement is a mystery; heck, even next year is a mystery. Your only goal is for nothing bad to happen to you. You'd rather not think about it and shift the blame onto the system or the economy. You hope your government will come in and save you, and when it does, you spend that stimulus check on a PS5.
Number thirteen: You have stupid high risk tolerance. When you have no control over your money and your spending habits, you tend to take huge risks for huge rewards. You gamble away your life savings on meme stocks. You remortgage your house to invest in a project you don't know anything about. You're the perfect target for scammers. You find thrill in risk and a sense of pleasure in a potential reward that could change your life, but that's never going to happen the way you want it. And you know that, but you still dream about it.
Number fourteen: You have a scarcity mindset. You believe that what you have is never going to be enough and you will never be able to acquire more. Now, the scarcity mindset stems from a deep-seated fear of not having enough or losing what you have. But here's the thing: Constantly focusing on what you lack only creates more lack. It blinds you to all the abundance that surrounds you and can prevent you from experiencing true happiness and fulfillment. You will never have enough if you believe you will never have enough.
And number fifteen: Financial ignorance. Some people are bad with money because they straight up ignore it. They don't check their bank balance; they don't check what they're spending on; they don't care about increasing their earning potential—none of that. They will justify it by saying they don't care about money, which by its own is a healthy attitude to have. The problem is, these people don't care about money until they suddenly hit a wall. They realize they maxed out what they can do with their initial situation. They can't start a family or raise a kid. They have no retirement plan, and that's when reality hits back.
We hope you learned something valuable here today. Alux, sir! And as a thank you for sticking with us until the end, of course, we've got a bonus. You lack confidence in your ability to achieve financial freedom. When you don't understand the money game, it doesn't matter how much or how little you have; you will always feel the danger of losing everything. You constantly worry about the worst-case scenario, and any money play cripples you.
Now, it's not bad to have a plan B in mind, but having a negative attitude toward money won't get you anywhere, besides maybe another maxed-out credit card. Thank you for watching this video, Alux, sir! If you found it valuable, consider subscribing to our channel and joining our awesome community. And if you're still hungry for more, we hand-picked this video for you to watch next, or head over to our website for more amazing content. See you tomorrow!