10 Financial Mistakes Wealthy People NEVER Make
Growing up, I rarely heard a positive word about money.
My mother would yell, "Turn off the light! You're running up my bill" or "Don't leave the water running when you brush your teeth." It made me think that there wasn't enough light or water. The problem was actually that there wasn't enough money in my household. The reason was because we never really studied personal finances.
As I became more independent, I studied the habits of wealthy people. Through my own mistakes, parental teachings, and conversations with wealthy people, I learned that there are 10 Financial Mistakes Wealthy People NEVER Make. Here they are:
1. Ignoring Bank Balances: Every time I went to the bank, the teller would ask me if I wanted to see my bank balance. Out of guilt, I would snatch the small slip of paper, scan it, crumple it up, then toss it in the trash. I immediately thought to myself, "My account will probably go back down to $0 anyways."
However, after dozens of overdraft fees, I became more sophisticated. I started to check my account thrice a day: morning, afternoon, and night. I discovered that I had to trust myself with money and become more financially responsible. If you want to grow your money, you must know your money. That's the only way your bank account will ever change.
To grow your money, you must know your money. -Daniel Ally
2. Accepting Excessive Fees: Banks make billions of dollars each year from overdraft fees alone. Because the majority of people are reckless with their money, the banks know that a standard rate of $30 could pay for 2-3 hours of 'teller-time.' However, wealthy people never allow useless fees invade their bank accounts.
Late fees, administration fees, set-up fees, processing fees and many others can all be avoided or waived. Most consumers are bombarded with a fortune of fees in their lifetime. Be mindful of these fees and deal with them immediately. Like a farmer, you must get the weeds out of your garden if you want to produce a better harvest.
3. Ignoring Credit: Most people grossly misunderstand the credit system. They think that interest rates won't affect them. They do. On a typical mortgage, a bad interest rate could add over $100,000 on to the cost of their home. With car payments, a person can pay $10,000 more than they should. Understand your credit if you want to improve it.
Wealthy people always know their credit score. They diligently shop around for the best interest rates because they are conscious of their credit. If they ever do get in debt, they never go delinquent. Getting behind on bills is just not their forte. They understand the credit system and use it to their advantage, not their disadvantage.
If you measure your results, you will master them. –Daniel Ally
4. Getting Behind on Bills: Can you image the millions of people who are behind on their bills? What are they actually thinking? Did they mismanage their money so well that they just happened to 'forget' that their bills were due on a certain day? No. Getting behind on bills is the result of pure laziness.
When people get behind on their bills, it damages their psyche. Their performance wanes and their mindset shifts from positive to negative. They lose their creative touch because they are scrambling to pay the bills instead of focusing on their purpose in life. Budget your money and master your bills. Wealthy people automate their bills and pay well ahead of time. Be proactive, not reactive.
5. Depleting Emergency Funds: One guy kept telling me that his emergency fund depletes every other month. The reason why this happens is because he has the wrong goals for his savings account. His only goal in saving money is to balance his emergency fund. Whenever the 'emergency' comes, which is every 30-60 days for most people, he uses all his money.
Wealthy people get past the emergency fund because they have a bigger reason for saving money. Usually, they are saving for an expenditure that is many times larger than the six months’ worth of emergency savings. Because they have expanded their financial consciousness, they have expanded their bank account. Basically, you need a bigger goal than to just 'save for a rainy day.' Get past your emergency fund.
The only reason to save is to invest. -Daniel Ally
6. Bad Charity: Not only do people spend frivolously, they also give frivolously. They give to a point that hurts them. They loan half their money to a struggling family member or pay off another person’s debt. Worst of all, some people automatically assign a fixed amount to charities they haven't thoroughly researched.
There are many virtues in giving, but you must give consciously. Some people will give all their money to homeless people, churches, foundations, and others while hurting themselves in return. Your giving must benefit all people and places, otherwise it's bad charity. Wealthy people will make many mistakes in charity, but they will constantly adjust. That's also why they'll have more money in the end.
7. Going Only for Deals: When I would go shopping with my dad, he would sprint to the back of the store and devour the 'clearance' rack. After picking up dozens of good deals, we would traverse back home to try them on. My dad always got the good deals, but we never wore the majority of the clothing.
When I grew up, I formed the same habits as my dad. I would go into the store, get a $20 shirt for $5, then keep it in my closet for months. A year or two would pass by and the tags would still be on the clothing. I learned that it was better to buy the shirt I want because I'll enjoy it 10x more, even if it's full price. In short, get what you want, even if there no discount.
When you live by the price, you die by the price. –Daniel Ally
8. Unconscious Spending: Retail stores make a living on impulse buyers. When you go to the grocery store, you'll always see people tossing Skittles, Kit-Kats, and Tic-Tacs on the conveyor belt at the register. However, this is not the only area in which they are unconscious spenders. They will buy bigger and better home furnishings, vehicles, and other large expenditures, all of which are overly emotional purchases to impress others.
Spending money unconsciously is a way of life for many people. I know people who earn $1 million per year, but will spend $1.2 million per year. It doesn't make sense, or dollars. When it comes to spending money, ask yourself, "Do I really want this? Do I need it? Will it help me in the next week, month, or year?" If you face each purchase consciously, you'll have more money at the end of the month.
9. Majoring on Minors: Like my beloved mother, people are unplugging appliances, buying fuel efficient cars, and clipping coupons. Even though these habits will save you thousands of dollars per year, it takes enormous time, energy, and creativity. With all that effort, you can earn at least twice as much as you tried to save.
When people major on minors, they fall into the trap of scarcity. As their financial world shrinks, their bank account also shrinks. When they reserve, they forget to expand. In other words, they miss out on great opportunities because they're so busy trying to get by and save money. They major on minors and miss the bigger picture of life.
10. Not Investing in Themselves: There are many people who easily splurge $2,000 on a vacation, but would hate to drop $20 on a new book. Wealthy people would never neglect their education. They realize that the more educated they are; the better decisions they can make in their future. They pay a premium price for advanced knowledge.
Personally, the bigger and better my library became, the bigger and better my house became. When I select education over entertainment, I find big results every time. There's nothing more satisfying than knowing more about yourself and the world in which you live. I have courses that can help you in this area.
The unfed mind devours itself. -Daniel Ally
If you want to improve your financial well-being, work on these key areas. Remember, the road to permanent, enduring riches begin with a dollar. Please share this article and leave a comment about your own experience.
I'll be looking forward to hearing from you.