Money Mistakes to Avoid
Do you ever sit and wonder to yourself incredulously “Where does my money go?”
Do you sometimes feel as though after stopping at the ATM to withdraw money, somehow it gets unceremoniously thrown to the wind….yes… it’s gone!! Do you feel like you let it blow away? You may walk in and out of a few shops and suddenly you are scrounging around again for parking money. It is not a great feeling at all.
Your financial success is directly related to how you think and feel about money. An abundant mindset is something many people don’t experience, but rather there is that constant feeling of lack and scarcity. Do you spend time thinking about money and planning, or do you worry that you may be focusing on the wrong thing? Here are my observations about the FIVE biggest mistakes that people make with their money.
All are easily changed with a shift in how you think and the actions that you take.
(We all have our vices!)
Do you ever find yourself saying “I’ll save, when I earn more!”? In real life, saving does not just happen. It’s easy to get into the mindset of “when I have more money, I’ll save money”, but, unfortunately, that is not how it works. It’s like promising yourself you will start your new diet on the first of the month or next Monday. Suddenly it’s the third of the month and you’re still on the couch watching Netflix, or it’s Tuesday and you put it off again until next Monday. Again.
The savings habits need to start NOW no matter what your income level. Why? Because by saving now you will be creating a saving HABIT and you will be taking control of your finances. It feels good to do that. By diverting income to savings instead of everyday expenses you will have to make decisions about what is really important to you. Yes, it will mean delaying instant gratification today for something that will happen in the future and you will get out of the “someday I’ll save” trap.
Can you start by saving 1% of your income this month? Then next month save 2% and slowly build up your savings rate aiming for a minimum of 10% of your annual income. Slow and steady will get you there. My goal for my clients is to build up their savings to 40% of their income. What to know how?
Your Wealth Creation
Are you focusing on creating wealth?
Because of the society that we live in, often our focus is on keeping up with the Jones’ and we end up forgetting to focus on our long-term needs. The Jones’ have the newest car and the biggest house and the latest gadget that comes along and, yes, who wouldn’t say no to Mrs Jones’ new Prada handbag, but are they planning for a financially secure future? What happens when that bag is last season?? They end up digging deeper into their savings’ pockets.
To have a secure financial future, you need to focus on building a nest egg that will pay you in retirement. Shift your focus away from spending to investing so that your retirement fund can pay you when you are older and still living life to the fullest. A friend of mines father is now 85, which means he has been retired for 20 years. Because he planned so well, he is still able to take lovely holidays every few months to see the things he loves. That’s 20 years of not working but still being able to enjoy his life. It’s 100% worth it. When you’re 85 and financially stress free, sitting on a luxury boat in Botswana, game viewing to your hearts content, I can promise you you will not be thinking about that handbag you couldn’t purchase when you were 42.
Do you have a financial plan for the future?
To wander aimlessly without a plan will get you nowhere. If you fail to plan, then you are planning to fail. A financial plan will guide you along the path to financial security. It will provide clarity and vision for where you are headed and how to get there. Without a plan in place it’s too easy to get off course, to be tempted to buy the latest and greatest on offer. Calculate how much you need to save to retire, or send your children to university, or to buy that dream house. Don’t leave it to chance, because it will never happen. A plan will get you to your goal.
A written plan is essential to succeed.
Your Financial Responsibility
Are you handing your financial responsibility over to someone else? It’s easy to let someone else handle your finances, whether it’s your partner, a parent, a financial adviser or an accountant. Initially money management can feel scary, but the more familiar you become the easier it gets. The real power lies in knowing where your money is coming from and where it is going.
All too often you read about a famous celebrity who is suing their accountant or adviser because they were cheated out of their fortune. Did they hand over control of their finances? By understanding your figures you can make the right decisions for you and your family. Do not leave it to chance! YOU know where YOU are headed, and you need to be excited about that journey.
By avoiding these money mistakes you will be on your way to a bright, financially secure future. With money in the bank and a plan laid out the possibilities become real AND exciting!
I love to hear your feedback.
Which Money Mistake will make sure to avoid?
Please share in the comments below