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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 March 4, 2019

How to Use Credit Cards While Staying Out of Debt

How to Use Credit Cards While Staying Out of Debt

Many people will suggest that the best thing to do with your credit cards during these tough economic times is to cut them up with a pair of scissors. Indeed, if you are already in huge debt, you probably should stop using them and begin a payback strategy immediately. However, if you are not currently in trouble with your credit cards, there are wise ways to use them.

I happen to really love my credit cards so I will share with you my approach to how I use mine without getting into deep financial trouble.

Ever since about 1983 when I got my first Visa card, I continue to charge as many of my purchases as possible on credit. Everything from gas, groceries and monthly payments for services like my cable and home security monitoring are charged on credit. Despite my heavy usage, I have maintained the joy of never paying any interest fees at all on any of my credit cards.

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Here are some tips on how best to use your credit cards without falling into the trap of paying those nasty double-digit interest fees.

Do Not Treat Credit Cards as Your Funding Sources

Too many people treat their credit cards as funding sources for major purchases. Do not do this if you want to stay out of trouble. I use my credit cards as convenient financial instruments so I do not have to carry around much cash. In fact, I hate carrying cash, especially coins. When you buy things on credit, the purchases are clean and you will not get annoying coins back as change.

I do not rely on my Visa, MasterCard or American Express to fund any of my purchases, large or small. This brings me to my golden rule when it comes to whether I will pull out any of my credit cards either at a retail or online store.

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I never purchase anything with my credit cards if I do not have the actual cash on hand in my bank account.

If I really cannot pay for the item or service with cash that I already have at the bank, then I simply will not make the purchase. Remember, my credit cards are not used as funding sources. They are just convenient alternatives to actual cash in my pocket.

Make Sure to Always Pay Off Balances in Full Each Month

The next very important part of my overall strategy is to make absolutely sure that I pay the balances in full each and every month no matter how large they are. This should never be a problem if the cash has been budgeted for my purchases and secured in the bank. I have always paid my full balances each month ever since my very first credit card and this is why I never pay interest charges.

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Using Credit Cards with Rewards

Most of my credit cards are of the “no annual fees” type, including one MasterCard on a separate account I keep at home as a spare in case I lose my wallet or incur any fraudulent charges. However, I do use a main Visa card which does have an annual fee because all purchases on that card reward me with airline frequent flyer points. For me, the annual fee is worth it since I do travel and I get enough points to redeem many free flights.

You have to decide for yourself if you will charge enough purchases on credit each year without paying interest charges to warrant a credit card that rewards you with airline points (or other rewards). In my case, the answer is “yes” but that might not be the case for you.

I occasionally use a MasterCard or American Express card on small purchases just to keep those accounts active. Also, I have been to the odd retailer that accepted only a certain type of credit card, so I find that having one from each major company is quite handy. Aside from my main Visa card which earns the airline points, the rest of my cards are of the “no annual fees” variety.

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So this is how I use my credit cards without getting into any financial trouble with them. This strategy is recommended only if you are not in debt, of course. In fact, it is worth keeping in mind once you’re out of debt so that you can keep your credit cards active and treat them responsibly.

What are your credit card usage strategies? Let me know in the comments — I’d love to hear what methods you use.

Featured photo credit: Artem Bali via unsplash.com

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