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10 Money Mistakes Successful People Don’t Make

10 Money Mistakes Successful People Don’t Make

Managing money effectively is a key success skill. Successful people make the decision to become effective with money, many of them early in life. Like any area of life, it is important to educate yourself about the threats and challenges in the world. Taking the time to master a few key principles will pay off for years to come.

1. They don’t overspend; they live on less than they make.

Living on less than you make is an essential money management skill. Some of the world’s wealthiest people have taken this principle to heart. For example, Sir John Templeton, a legendary investor who became a billionaire, saved 50% of his income even when he grew up with limited means. If that is more than you manage, don’t worry! You can reach financial success by saving 10-15% of your income.

Tip: Learning to live on less than you earn takes time. Start by looking for ways to save money: 55 Practical Ways To Save Money Efficiently.

2. They don’t fixate on price; they understand the importance of value.

The price you pay for an investment, a meal or piece of clothing is only part of the story. Successful people also think about the value of that good. For investments, they consider the prospects for the investment growing in the future. For personal items, they look for high quality products that will last. For example, a well made pair of business shoes may cost $200 or more but these shoes can last for years with proper care.

Tip: Buy high quality products that will last for a long time.

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3. They don’t waste cash on fees and interest; they know how to manage their banking

Carrying a balance on your credit card is incredibly expensive and sadly common. According to CNN, the average American household carried over $15,000 in credit card debt. Successful people also keep an eye on their bank fees–how much they pay for ATM use and other transactions. These fees are easy to avoid with planning once you understand how the system works. Simply reviewing your financial accounts for 5-10 minutes each month is all it takes to understand your fees.

Discover: 7 Essential Ways To Avoid Unnecessary Bank Charges.

4. They don’t forget to adjust their finances after big changes in life.

Did you get married recently? Is your spouse referenced in your will? These are some of the points that financially successful people manage effectively. While you can automate a great deal of your finances, it is vital to make adjustments when your life and family circumstances change significantly. Sitting down by yourself (or with a financial expert) at least once a year to review your life and financial plan is an excellent way to stay on top of important changes.

Learn: Arrange your finances for the long term with estate planning.

5. They are not satisfied with a stagnant income; they look for ways to increase their income.

Some people never ask for more money or simply settle for 1-3% increases. Unfortunately, that rate of income growth means you are simply standing still–inflation is slowly eating away at your purchasing power. Instead, successful people look for ways to earn more income. Increased income gives you more options for personal enjoyment, more capacity to give money, and a sense of security.

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Successful people take daily action to increase their income. For example, they take a course to improve their skills or they contribute ideas to improve the productivity of their companies. They also know how to ask for more money.

Tip: Do yourself a favor and learn about high paying fields: earn $100,000 in project management and discover the highest paid jobs in America.

6. They don’t ignore financial statements.

Reaching financial success requires some slow and steady habits. That includes forming a habit to monitor your financial statements. Successful people set a time each month–30 to 60 minutes–to review all of their financial accounts: investments, bank accounts, credit cards and more. When they detect an error or omission, they take immediate action.

Tip: Set a recurring reminder in your calendar each month to review your financial accounts.

7. They don’t take foolish risks in money.

Warren Buffet is often quoted as saying, “Rule number one is never lose money.” All investments carry some measure of risk (and therefore the potential to lose money). That said, successful people use two powerful tools to avoid losses. They understand the value of insurance to control risk (e.g. home, auto, and life insurance) and the importance of asset allocation.

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Remember: If it sounds too good to be true (or if you don’t understand how it works), slow down and start asking plenty of questions.

8. They don’t pretend to understand everything when it comes to money.

The world is a vast and complex place–successful people know and deeply understand this truth. When it comes to money, there is a lot of information out there. That’s why successful people like Warren Buffet understand their limits and focus on their strengths.

Tip: Review your knowledge of money and investments. If you are just starting out, read one or two classic personal finance books. Or read 9 Can’t-Miss Secrets Behind Warren Buffett’s Wealth for more insights from one of the world’s most successful investors.

9. They don’t transfer responsibility to experts.

Successful people do seek out the advice of experts, yet they never yield responsibility. For example, it is reasonable to seek advice from a tax accountant in planning your financial affairs. However, successful people take the time to ask questions and evaluate the person providing advice to them.

Tip: When seeking advice from professionals like accountants and lawyers, ask questions and seek to have the advice explained to you. Otherwise, it is difficult to act on the advice.

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10. They don’t let the pursuit of money overcome other values.

Seeking financial success is a valid goal. Significant financial resources give you more options to give to causes you believe in. It also means improved access to technology, health care and leisure. However, successful people understand that financial success is only one aspect of a successful life. For example, neglecting health in the pursuit of money is a poor strategy.

Tip: Review your personal goals to see if you have a balance between financial goals, career goals, family goals and other activities.

Featured photo credit: Money/martaposemuckel via pixabay.com

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Bruce Harpham

Bruce Harpham is a Project Management Professional and Founder and CEO of Project Management Hacks.

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Last Updated on January 21, 2020

How to Develop a Millionaire Mindset in 6 Simple Steps

How to Develop a Millionaire Mindset in 6 Simple Steps

We all like to dream about being financially wealthy. For most people though, it remains a dream and nothing more. Why is that?

It’s because most people don’t set their mind to achieving that goal. They might not be happy in their current situation but they’re comfortable – and comfort is one of the biggest enemies of growth.

How do you go about developing that millionaire mindset? By following these simple steps:

1. Focus On What You Want – And Take It!

So many people are too timid to admit they want something and go for it. When there is something that you want to accomplish don’t think “I could never actually do that”, think “I could do that and I WILL do that”.

Millionaires play to win, not to avoid defeat.

This doesn’t mean to have to become a selfish jerk. What it means is becoming more assertive and honest with yourself. You don’t have to grab off other people. There is a big pot of unclaimed gold in the middle of the table — why shouldn’t you be the one to claim it? You deserve it!

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2. Become Goal-Orientated

It’s almost impossible to achieve anything if you don’t set firm goals. Only lottery winners become millionaires overnight. By setting yourself attainable goals, you will get there eventually. Don’t try to get rich quickly — get rich slowly.

Let’s take the idea of making your first million dollars and expand on what kind of goals you might set to get there. Let’s also say you’re starting at a break-even position – you’re making enough to get by with a few luxuries, but nothing more.

Your goal for the first year can be having $10,000 in the bank within a year. It won’t be easy but it is doable. Next, you need to figure out the steps you need to take to achieve that goal.

Always look at ways to make growth before cutbacks. With that in mind, you might want to see if you can negotiate a pay rise with your boss, or if there’s another job out there that will pay better. You might be comfortable in your old job but remember, comfort stunts growth.

You may also have other skills outside of your workplace that you can monetize to boost your bank balance. Maybe you can design websites for people, at a fee of course, or make alterations to clothes.

If this is still not enough to make the money you need to save $10,000 in a year, then it’s time to look at cutbacks. Do you have a bunch of old junk that someone else might love? Sell it! Do you really need to spend $10 on your lunch everyday when you could make your own for a fraction of the cost?

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If you are to become a millionaire, you need to start accumulating money.

Here’re some tips to help you: How to Become Goal Oriented and Achieve More in Life

3. Don’t Spend Your Money – Invest It

The reason you need to accumulate money is for step three. Millionaires tend to be frugal people, and that’s because they know the true value of money is in investing. Being your own boss goes hand-in-hand with becoming a millionaire. You’ll want to quit your regular job at some point.

Stop working for your money and make your money work for you.

Rather than buying yourself a new iPad, that $500 could be used to invest in the stock market. Find the right shares (more on that later), and that money could easily double within a year.

There’s not just the stock market — there’s also property, and your own education.

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4. Never Stop Learning

The best thing you can invest in is yourself.

Once most people leave the education system, they think their learning days are over. Well theirs might be, but yours shouldn’t be. Successful people continually learn and adapt.

Billionaire Warren Buffet estimates that he read at least 100 books on investing before he turned twenty. Most people never read another book after they’ve left school. Who would you rather be?

Learn everything you can about how economics works, how the stocks markets work, how they trend.

Learn new skills. If you have an interest in it, learn everything you can about it. You’d be surprised at how often, seemingly useless skills, can become extremely useful in the right situation.

Start developing the habit of learning continuously: How to Create a Habit of Continuous Learning for a Better You

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5. Think Big

While I advise to start off with small goals, you absolutely should have a big goal in mind. If you have a business idea, then that is your ultimate goal – to start that business and make a success of it. If you want to invest your way to millions of dollars and do little work other than research, then that is your big goal.

There is no shame in not achieving a big goal. If you run a business and aim to make $1 million profit in a year and “only” make $200,000, then you’re still significantly ahead of most people.

Aim for the stars, if you fail you’ll still be over the moon.

6. Enjoy the Attention

To be successful, you have to be willing to promote yourself and enjoy the attention to a certain extent. Now the attention doesn’t need to be on yourself, it could be on your brand, but attention definitely attracts money.

Never be embarrassed to get your name out there. That means finding a spotlight and being brave enough to step right up underneath it.

If you run a business, try contacting the local papers. You’d be surprised at how amenable they often are to running a story about you and your business, and it’s all free publicity.

Above all, remember: You control your own destiny. Push hard enough for anything and you’ll get it.

More About Thinking Smart

Featured photo credit: Austin Distel via unsplash.com

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