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.
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?
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.”
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