We all make money mistakes; howbeit, we learn. We learn from our mistakes and that of others. The lesson here is that we shouldn’t know what money mistakes are and still make them.
I compiled five money mistakes we shouldn’t be making. Though, we mostly know them by heart, they are still easy traps for many and we have to be intentional not to make them.
1. Spending All You Earn: This tops my list because it is a very common mistake people make. As long as you have access to money, you are tempted to spend it; reasons to spend this money arise, therefore it is a quick trap to many. As often as you earn money, you should be setting aside at least 10-20% of this income to grow wealth for you.
2. Waiting For Mr Luck To Find You: Hmmmmn… this is what quite a number of people dream of… you get that high-paying job, win a lottery, get an inheritance or some form of money falling on you. While there is a tiny possibility of this happening, you sure wouldn’t stake your wealth on a slim possibility. You’ve got to work towards building wealth. You need to be intentional about it. And you can do it! Start with controlling your spending with the use of a budget, set aside at least 10-20% of income towards investment, learn the basics of investment, give, stay off debt and have a money-attracting personality.
3. Limiting Your Income To Your Abilities: We have active, portfolio and passive income. Active income is money you earn in exchange of your time and skills. Portfolio income is money you receive from investment, dividends, interest and capital gains. Passive income is money that requires little or no efforts to earn and maintain e.g. rental income
The goal should be to use your active income to build passive and portfolio income so that you can still generate income without you working directly to earn it.
4. Spending More Than You Earn: The impulse to spend now and tick it against future income is very common. We tend to spend more than we have access to. It is an impulse we must strongly resist.
■If you don’t have it, don’t spend it.
It is very possible to live a debt-free life; we should make it our aim!
5. Thinking Investment Is complex: While investment is not an activity as easy as nursery recitations, it is very possible to learn and master the basics. Understand your investment goals, risk appetite, time horizon and identify options that suit you.
There are investment options for different personality types. Know the basic and keep learning!
Do you know other money mistakes we shouldn’t be making? I will like to read up in the comment section.
We believe in you!
To your financial independence and freedom