The average savings rate over the last year is under 6%<\/a>, and if that doesn\u2019t seem so bad, consider that in late 2012, it was 11%. In mid-1975, it was 17%.<\/p>\n Stock ownership has reached record lows, with just over half (52%) of Americans owning any stocks<\/a>. For context, that number was nearly two-thirds (65%) less than 10\u00a0years ago.<\/p>\n Then there\u2019s retirement savings, a sorry state if there ever was one. The median U.S. retirement savings is a mere $5,000<\/a>.<\/p>\n These facts register somewhere between \u201cscary\u201d and \u201coh s#!t.\u201d<\/p>\n So how can we as a nation turn this fiscal frown upside down? How can we start saving and investing more, so we\u2019re not all working until we\u2019re 80 or clambering for government handouts in our golden years?<\/p>\n Here are seven ways to break these bad financial habits and cure the disease of the poverty mindset.<\/p>\n All right, you probably don\u2019t have to physically cut your debit or credit card in half with scissors, but if you don’t, then at least hide your cards away in your bedside drawer. Every two weeks when you get paid, take out a certain amount of cash, and that\u2019s it — that\u2019s what you have to spend.<\/p>\n There\u2019s the obvious perk that you can\u2019t spend more than what\u2019s physically in your wallet. But just as importantly, when you spend cash, your brain processes spending better. You\u2019ll subconsciously keep track of how much you\u2019ve spent and how much you have left in your wallet, which simply doesn\u2019t happen when you\u2019re swiping plastic.<\/p>\n Credit cards are a tool for advanced consumers (and can even be used to buy real estate<\/a>\u00a0—\u00a0by advanced investors), but are too easy to abuse for average consumers. Keep in mind that credit card companies have different goals than consumers do: Their goal is to get consumers to charge the maximum amount possible that they can still collect on later.<\/p>\n Related:<\/strong> The Foolproof Monthly Budget: How to Save Up Money to Buy Investment Properties<\/a><\/em><\/p>\n Consumers\u2019 goal with credit cards should be \u201cget rewards but never pay interest.\u201d Alas, it rarely happens that way.<\/p>\n If you\u2019re not saving at a high rate, try this instead. First, leave your credit card in your bedside drawer. Next, set up automatic transfers to take place on your payday every two weeks. As soon as you get paid, money should transfer into your savings account, leaving only your budgeted spending amount in your checking account.<\/p>\n Even better, have your payroll split between your checking account (for operating expenses) and your savings account. Your savings literally never touches your checking account in this scenario, making it that much harder to spend.<\/p>\n No muss, no fuss, just spend what\u2019s in your checking account each month and invest what\u2019s in your savings account.<\/p>\n In the real world, you don\u2019t have a monthly budget of \u201cmy annual income divided by 12.\u201d What you have to live on is usually four weeks\u2019 after-tax income — and occasionally a bonus paycheck.<\/p>\n Always transfer your bonus paycheck directly to savings. No discussion, no objections, just do it.<\/p>\n But even more importantly, your monthly budget has to be based on your reliable take-home pay. Four weeks’ pay, not some fraction that exists only on paper.<\/p>\n Better yet, live on only two weeks\u2019 income, and invest the other half of it<\/a>!<\/p>\n Poverty isn\u2019t just a lack of money. It\u2019s a mindset and a lack of knowledge. How many people living in the slums can set proper budgets, calculate ROI, or maximize tax benefits<\/a>?<\/p>\n We as a nation should be teaching these lessons in public schools, but we don\u2019t. That means it\u2019s up to parents and other role models to teach children and teenagers about how to earn, grow, invest, and manage money. It means an ongoing, informative, and open conversation about money. Show your kids how to budget with high savings rates. Show them how to invest in stocks, funds, and real estate. Show them how returns work (and maybe rig their returns to be positive and strong at the beginning, so they see tangible results). Teach them the rules of the investing and tax games, so they\u2019ll know how to win them.<\/p>\n Better yet, raise your kids to be good entrepreneurs, not good employees. After all, do you really want your son to grow up to be a yes man — or your daughter to enter numbers in a spreadsheet all day? In tomorrow\u2019s world, we will all be responsible for creating our own jobs and career paths. It\u2019s already happening today; look no further than the advent of the gig economy and the collapse of the \u201ccareer job.\u201d<\/p>\n Indulge me a moment, while I quote at you.<\/p>\n John Lee Dumas of Entrepreneur on Fire always closes his podcasts with, \u201cYou are the average of the five people you spend the most time with.\u201d<\/p>\n Brian Tracy, the personal development icon, waxes more colorfully: \u201cYou\u2019ll never fly with the eagles if you spend your time scratching with the turkeys.\u201d<\/p>\n If you want to develop (and more importantly, maintain) good financial habits, you need to spend time with similarly disciplined people. My wife, for example, falls into her old bad spending habits whenever she\u2019s out with her friend Caitriona (pronounced \u201cKatrina\u201d — she\u2019s Irish). They go to the mall, slurp down $5 lattes, and cart boxes of frivolous new shoes into the house. It’s like a slow-motion recurring nightmare.<\/p>\n Related:<\/strong> Living Frugally vs. Spending on What Matters: How I Achieve a Happy Medium<\/a><\/em><\/p>\n Peer pressure is very real, so rig it to boost yourself up, rather than letting it drag you down.<\/p>\n (Side lesson: Marriage is hard.)<\/p>\n7 Ways Americans Can Break Bad Financial Habits<\/h2>\n
1. Go on a cash diet.<\/h3>\n
![\"frugality\"](\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2016\/12\/frugality.jpg\" "\\"\\"")
<\/p>\n2. Don\u2019t like the cash diet? Segregate your accounts and live on your debit card only.<\/h3>\n
3. Split your paycheck.<\/h3>\n
4. Budget based on four weeks\u2019 income.<\/h3>\n
5. Teach your kids about money (and raise them to be entrepreneurs)!<\/h3>\n
6. Surround yourself with financially capable and driven people.<\/h3>\n
![\"budget\"](\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2016\/12\/budget.jpg\" "\\"\\"")
<\/p>\n7. Use online budgeting and aggregating tools to measure your progress.<\/h3>\n