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It’s natural to be curious about how well off — or not — our friends, neighbors and peers are. And for better or worse, social media makes it easy to satisfy this curiosity. You may be inclined to assume that the folks you interact with on a regular basis are doing quite well financially. However, social posts focus on the positive, which can make it appear as though they have more money than they actually do.
With this in mind, here are a few signs that may indicate the people you know are actually broke — or that you’re headed down a similar path.
One mistake people make all the time is figuring that because they earn a lot, they can afford to spend a lot. In reality, if you don’t keep any of your income, you’re going to end up broke.
A 2024 PYMNTS survey found that 48% of people earning more than $100,000 a year live paycheck to paycheck with no money in savings to fall back on. And the same holds true for 36% of people earning more than $200,000 a year.
Another big mistake most Americans make is leaving their money in low-interest savings accounts. More than 82% of the population is missing out on high-yield savings accounts, which offer returns up to 10 times higher than traditional banks, according to CNBC.
To get started, a high-yield account, such as a Wealthfront Cash Account, can be a great place to grow your emergency funds, offering both competitive interest rates and easy access to your cash when you need it.
A Wealthfront Cash Account can provide a base variable APY of 3.50%, but new clients can get a 0.65% boost over their first three months for a total APY of 4.15% provided by program banks on your uninvested cash. That’s over nine times the national deposit savings rate, according to the FDIC’s October report.
With no minimum balances or account fees, as well as 24/7 withdrawals and free domestic wire transfers, you can ensure your funds remain accessible at all times. Plus, Wealthfront Cash Account balances of up to $8 million are insured by the FDIC through program banks.
It’s okay to splurge on a quality item from time to time, especially if it’s something that helps you earn money, like a laptop you use for your job. But if you feel compelled to only buy brand names — and the fanciest ones at that — you’re more likely to end up in a bad place financially.
This may be why total U.S. household debt has jumped by $93 billion to reach $18.04 trillion, according to the Federal Reserve.
If you want to avoid becoming broke, don’t buy things — whether it’s a car, a house, or clothing — with the goal of showing off. Instead, buy things with the goal of addressing your needs as economically as possible.
When you do spend, you can also be smarter with your money by automatically investing your spare change with Acorns.
The app rounds up each of your everyday purchases to the nearest dollar and invests the difference in a diversified portfolio. This means that every transaction — from your morning coffee to grocery shopping — contributes to building your retirement nest egg.
For example, when you spend $3.60 on coffee, Acorns will automatically invest the 40-cent difference. Plus, with an Acorns Silver plan, you get access to Acorns Later, a retirement investment account with a 1% IRA match on new contributions.
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People who are secretly broke tend to give in to impulse purchases rather than planning and budgeting. Worse yet, they tend to use credit cards to fund impulse purchases, driving themselves even deeper into debt.
While occasional impulse buys may not break the bank, making a habit of them can seriously harm your finances. Instead, focus on budgeting and being intentional with your spending.
Budgeting can be challenging, especially when trying to track multiple accounts, shopping and daily expenses simultaneously.
If managing a budget feels overwhelming to you, apps like Rocket Money can simplify the process.
Rocket Money tracks and categorizes your expenses, providing a clear view of your cash, credit, and investments in one place. It can even uncover forgotten subscriptions, helping you cut unnecessary costs and save potentially hundreds annually.
For a small fee, the app can also negotiate lower rates on your monthly bills, making it a valuable tool for keeping your finances on track.
There are certain tried and true methods of growing wealth over time. These include buying a home and seeing its value increase, investing in stocks and holding them for decades, and putting money into bonds for slower but stable returns.
Chasing get-rich-quick schemes, on the other hand, is a good way to end up with less money rather than more.
Even short-term stock investments can be risky, as it often takes time for stocks to increase in value. So instead of trying to make a quick buck, focus on ways to slowly but consistently grow your net worth, such as contributing to your employer’s 401(k) every month and investing for long-term growth.
You can also take advantage of Wealthfront’s automated investing platform, where the power of compound interest works for you. Their sophisticated “set it and forget it” approach means your money is professionally managed and automatically rebalanced, allowing your wealth to grow steadily over time.
Start investing for the long term with globally diversified portfolios or go for a higher yield than a traditional savings account with an automated bond portfolio.
Open your account today and receive a $50 bonus to jumpstart your investment journey. Whether you’re saving for retirement, a home, or building generational wealth, Wealthfront’s low-cost, automated investment strategy can help you achieve your financial goals.
When you head out on a road trip without directions, you risk getting lost along the way. Similarly, if you go through life without a financial plan, you risk winding up broke — or if not broke, at the very least, shy of your financial goals.
A 2024 Northwestern Mutual survey found that 55% of Americans don’t have a broad financial plan that allows them to balance their near-term and long-term goals. If that’s the case for you, it’s a good idea to talk to a financial advisor and get on a better path.
Advisor.com can quickly match you with an advisor who can guide you through your options. The platform’s advisors are fiduciaries, meaning they are legally obligated to act in your best interest.
Just answer a few questions about your investment timeline and your goals, and Advisor.com will match you with a reputable financial advisor.
Book a free, no-obligation call today to see if they’re the right fit for your needs.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.