Building wealth is really pretty simple. Spend less than you make, regularly invest the money you save, reinvest your profits and let compound interest build your wealth for you. Why then are Americans so unprepared for retirement and deeply in debt? Here are 15 common money pitfalls to avoid becoming another case study:

1. Ignoring Your Personal Finances: The first step in becoming wealthy is to understand your income and expenses. Without knowing how much you have coming in and what’s going out is like driving a car without a gas gauge.
2. Refusing to Budget: Creating boundaries and limits helps identify and reduce unnecessary spending, while planning to set aside money for your financially free fund.
3. Using Credit Cards to Supplement Your Income: If you can’t afford it, you shouldn’t buy it. Numerous small expenses will quickly add up to a big expense that will drive you deeper in debt. Additionally, the items you used credit for will cost you a whole lot more with interest accruing.
4. No Emergency Fund: You should have 3-6 months of living expenses set aside in a cash account to be prepared for tough times. This precautionary step will help you avoid turning to credit in order to bail yourself out. Make the best out of a tough situation by being one step ahead.
5. Lending Money Interest Free: Your money in a basic savings account is unable to keep up with the pace of inflation, and is losing value. Cash beyond your emergency fund should be transferred into another higher yielding investment account, such as a CD or mutual fund.
6. Paying Yourself Last: Procrastination and delaying your investments in a retirement plan is a sure way to miss out on a comfy retirement. You know the saying, “Failing to plan is planning to fail.” Take advantage of employer 401k matching and tax sheltered retirement accounts such as a 401k or an IRA.
7. Dipping into Your Retirement Fund: The tax implications and long term effects on prematurely taking money out of your retirement plan is a poor decision. This should be an absolute last case scenario.
8. Not Reviewing Your Credit Report: You are entitled to a free copy of your credit report from each of the three credit reporting agencies. Take advantage of this and review your credit report for inconsistencies every four months. Order a copy of your report from AnnualCreditReport.com.
9. Failing to Diversify: You never know what trouble lies ahead that could bring an entire industry down. Diversification is the only way to protect yourself from the inevitable.
10. Ignoring Investment Fees: Your investment picks might have an outstanding track record, but your brokerage and mutual fund fees could deteriorate your gains. Remember to understand and consider all fees before making an investment and taking profits.
11. Avoiding or Taking on too Much Risk: It’s important to have a nice balance between risk and reward. Not taking any risk will get you nowhere, and taking on too much risk can drain your account. Be sure to understand your risk tolerance and properly allocate your investments according to your investment strategy.
12. Letting Day-to-Day Conditions Affect Your Investment Decisions: Remember that investing is for the long term, and over time the stock market has returned incredible gains. There will be many declines and many all-time highs, but over time you will have nice, consistent gains in your portfolio and opportunities to purchase stocks or funds at tremendous discounts.
13. Paying the Tax Man too Much: Take advantage of all tax incentives including common tax deductibles and pre-tax retirement contributions.
14. Staying on Task: Becoming wealthy is a long road of consistent, sound money habits. Don’t forget that wealth accumulation is a long-term process and does not happen overnight.
15. Not Sweating the Small Stuff: Small contributions add up to big bank accounts, just as small expenses add up to large expenses.

Millionaire Money Habit: To become a self-made millionaire, all you have to do is pay attention to the fundamentals of wealth accumulation. Take a look in the mirror and see where you can make improvements in your plan.