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If You Want To Be Wealthy, You Should Avoid These 7 Money Mistakes

If You Want To Be Wealthy, You Should Avoid These 7 Money Mistakes

Who does not dream of becoming wealthy? If you ask people around you about their goal in life, many of them would say that it is being rich or wealthy. The reasons why people want to be wealthy vary from person to person.

Whatever your ulterior motive is, if you want to be wealthy, there are tried and tested money mistakes – yes, money mistakes, that you must avoid. Here, we bring to you a list of seven money mistakes that all of us should shun.

1. Spending more than you earn:

It sounds like common sense but it is not. If this money mistake was simple enough to avoid, nobody would be in a financial crisis. This is a deadly habit and can ultimately lead to total financial distress. To make matters worse, we now have credit cards and other facilities that make us spend more than our financial means.  To curb the urge to spend more than what you earn, maintain a budget and then track it closely.

“Before you spend, earn.” ~–William A. Ward

2. Buying things you do not need:

All of us want to show-off our success but remember, wealthy people do not have to show if off. It shows itself but if you are on your path to being wealthy, don’t commit this money mistake. You should definitely spend on things of your interest but do not buy things solely for the purpose of impressing others, who are sometimes, even those people that you do not like at all.

“If you buy things you don’t need, soon you will have to sell things you need.” ~ Warren Buffet

3. Not facing your financial situation

You might ask me how making this mistake is even possible but this is our defense mechanism. When we are obese and don’t want to do any effort to lose weight, we start avoiding the mirror.

Similarly, when we know that our money matters are in bad shape and we are not ready to make an effort to fix them, we avoid looking at the exact figures and that makes matters even worse! We should put the figures on a paper or on an excel sheet and look at them very carefully. That’s the first step towards dealing with your money troubles.

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 4. Not having a plan

Just like it is required for anything else, planning is an absolute must for your financial goals. Your financial goals can and must include your retirement plans, planning to pay your debt as soon as possible and creating investments no matter if your income is high or low.

“Make sure you have a plan of your life in your hand, and that includes the financial plan and your mission.” ~ Manoj Arora

5. Relying on one income stream

Many of us live depend on a single income stream and we are quite happy to get a pay cheque on a fixed date. Even those of us, who run their own business or are self-employed, usually rely on one channel of income. This can lead to an absolute disaster. No matter how steady or great that income is, if it runs dry due to any problem, it can create huge financial issues.

6. Not trying to increase your income

If somebody asks you today to save more, do you automatically start thinking about expenses that you can cut down?

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Wrong approach.

The better approach is to try to increase your income. Let’s assume that a person saves 25% of their income, if the income increases, savings too will automatically increase. However, always trying to cut down on your expenses is not a very fruitful and long-term strategy. If you leave too many things, it will make you frustrated and you will not be able to achieve your goal of being wealthy.

7. Prioritizing spending over saving

When we have a pressing need at present, we tend to feel that we should fulfill that need and savings can always be done later. This later won’t ever come because your needs never end. Research chemist Neil McCarthy started investing in the stock market at a very young age. Today he has a net worth of about $2.1 million. According to him what made all the difference is this:

“If you wait to save out of what’s left over from your salary, it’s not going to happen. Pay yourself first.”

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If you want to be wealthy, there’s no easy route. Just focus on your goals and face the current problems in a realistic manner. Make sure you avoid these money mistakes on your path to being wealthy and success would be yours!!

 

Featured photo credit: Money – Savings by 401(K) 2012 via flickr.com

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Published on November 20, 2018

The Best Ways to Save Money Even Impulsive Spenders Can Get Behind

The Best Ways to Save Money Even Impulsive Spenders Can Get Behind

The truth is, there are many “money saving guides” online, but most don’t cover the root issue for not saving.

Once I’d discovered a few key factors that allowed me to save 10k in one year, I realized why most articles couldn’t help me. The problem is that even with the right strategies you can still fail to save money. You need to have the right systems in place and the right mindset.

In this guide, I’ll cover the best ways to save money — practical yet powerful steps you can take to start saving more. It won’t be easy but with hard work, I’m confident you’ll be able to save more money–even if you’re an impulsive spender.

Why Your Past Prevents You from Saving Money

Are you constantly thinking about your financial mistakes?

If so, these thoughts are holding you back from saving.

I get it, you wish you could go back in time to avoid your financial downfalls. But dwelling over your past will only rob you from your future. Instead, reflect on your mistakes and ask yourself what lessons you can learn from them.

It wasn’t easy for me to accept that I had accumulated thousands of dollars in credit card debt. Once I did, I started heading in the right direction. Embrace your past failures and use them as an opportunity to set new financial goals.

For example, after accepting that you’re thousands of dollars in debt create a plan to be debt free in a year or two. This way when you’ll be at peace even when you get negative thoughts about your finances. Now you can focus more time on saving and less on your past financial mistakes.

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How to Effortlessly Track Your Spending

Stop manually tracking your spending.

Leverage powerful analytic tools such as Personal Capital and these money management apps to do the work for you. This tool has worked for me and has kept me motivated to why I’m saving in the first place. Once you login to your Personal Capital dashboard, you’re able to view your net worth.

When I’d first signed up with Personal Capital, I had a negative net worth, but this motivated me to save more. With this tool, you can also view your spending patterns, expenses, and how much money you’re saving.

Use your net worth as your north star to saving more. Whenever you experience financial setbacks, view how far you’ve come along. Saving money is only half the battle, being consistent is the other half.

The Truth on Why You Keep Failing

Saving money isn’t sexy. If it was, wouldn’t everyone be doing it?

Some people are natural savers, but most are impulsive spenders. Instead of denying that you’re an impulsive spender, embrace it.

Don’t try to save 60 to 70% of your income if this means you’ll live a miserable life. Saving money isn’t a race but a marathon. You’re saving for retirement and for large purchases.

If you’re currently having a hard time saving, start spending more money on nice things. This may sound counterintuitive but hear me out. Wouldn’t it be better to save $200 each month for 12 months instead of $500 for 3 months?

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Most people run into trouble because they create budgets that set them up for failure. This system won’t work for those who are frugal, but chances are they don’t need help saving. This system is for those who can’t save money and need to be rewarded for their hard work.

Only because you’re buying nice things doesn’t mean that you’ll save less. Here are some rules you should have in place:

  1. Save more than 50% of your available money (after expenses)
  2. Only buy nice things after saving
  3. Automate your savings with automatic bank transfers

These are the same rules that helped me save thousands each year while buying the latest iPhone. Focus only on items that are important to you. Remember, you can afford anything but not everything.

How to Foolproof Yourself out of Debt

Personal finance is a game. On one end, you’re earning money; and on the to other, you’re saving. But what ends up counting in the end isn’t how much you earn but how much you save. Research shows that about 60% of Americans spend more than they save.[1]

So how can you separate yourself from the 60%?

By not accumulating more debt. This way you’ll have more money to save and avoid having more financial obligations. A great way to stop accumulating debt is using cash to pay for all your transactions.

This will be challenging, depending on how reliant you are with your credit card, but it’s worth the effort. Not only will you stop accruing debt, but you’ll also be more conscious with what you buy.

For example, you’ll think twice about purchasing a new $200 headphone despite having the cash to buy them. According to a poll conducted by The CreditCards.com, 5 out of 6 Americans are impulsive spenders.[2]

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Telling yourself that you’ll have the discipline to not buy things won’t cut it. This is equal to having junk food in your fridge while trying to eat healthy–it’s only a matter of time before you slip. By using cash to make your purchases, you’ll spend less and save more.

A Proven Formula to Skyrocket Your Savings

Having proven systems in place to help you save more is important, but they’re not the best way to save money.

You can search for dozens of ways to save money, but there’ll always be a limit. Instead of spending the majority of your effort saving, look for ways to increase your income. The truth is that once you have the right systems in place, saving is easy.

What’s challenging is earning more money. There are many routes you can take to achieve this. For example, you can work long and hard at your current job to earn a raise. But there’s one problem–you’re depending on someone else to give you a raise.

Your company will have to have the budget, and you’ll have to know how to toot your own horn to get this raise. This isn’t to say that earning a raise is impossible, but things are better when you’re in control right? That’s why building a side-hustle is the best way to increase your income.

Think of your side-hustle as a part-time job doing something you enjoy. You can sell items on eBay for a profit, or design websites for small businesses. Building a side-hustle will be on the hardest things you’ll do, be too stubborn to quit.

During the early stages, you won’t be making money and that’s okay. Since you already have a source of income, you won’t be dependent on your side-hustle to pay for your expenses. Depending on how much time you invest in your side-hustle, it can one day replace your current income.

Whatever route you take, focus more on earning and save as much as possible. You have more control than you give yourself credit for.

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Transform Yourself into a Saving Money Machine

Saving money isn’t complicated but it’s one of the hardest things you’ll do.

By learning from your mistakes and rewarding yourself after saving you’ll save more. What would you do with an extra $200 or $500 each month? To some, this is life-changing money that can improve the quality of their lives.

The truth is saving money is an art. Save too much and you’ll quit, but save too little and you’ll pay for the consequences in the future. Saving money takes effort and having the right systems in place.

Imagine if you’d started saving an extra $100 this next month? Or, saved $20K in one year? Although it’s hard to imagine, this can be your reality if you follow the principles covered in this guide.

Take a moment to brainstorm which goals you’d be able to reach if you had extra money each month. Use these goals as motivation to help you stay on track on your journey to saving more. If I was able to save thousands of dollars with little guidance, imagine what you’ll be able to do.

What are you waiting for? Go and start saving money, the sky is your limit.

Featured photo credit: rawpixel via unsplash.com

Reference

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