Money Management – Big Mistakes Millionaires Do not Make
The major difference between wealthy and the rest is their ability to control money and not letting the money control them. It is the aimless attitude of many that leads them to make serious mistakes while taking financial decisions. Unless one learns to adopt good money habits as well as a disciplined approach to avoid mistake, the dream of becoming a millionaire will be on the bay.
Mistake #1 Refusing to face the facts
If you are not so smart with numbers, it may be so tempting to cut off yourself from managing finances by ignoring the bank statements or neglecting the need to stay on top of your investments. But, this is not ideal for someone who keeps a millionaire dream. Those with sky-high bank accounts never amass any big bucks by being totally unaware of their balance sheets.
If a person does not have the facts about his or her financial situation, then money will simply flow through your hand like plain water. As a consequence of it, one may fall into bad debts and may end up in a financial collapse.
Some people think that one should be an investment banker to understand the financial concepts rightly but remember the wealthy people you see are not those born bankers with secret know-how. As with any other things, it is gradual learning. If you tend to procrastinate facing money matters by being scared of getting confused, it is high time that you should dive in and master it. Even if you find many things strange out there, ultimately it will allow you to make those key decisions and let you move forward.
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Starting from the very base, the first step is for you to gather all information about one’s bank account, other savings, and also a clear understanding of the inflow and outflow of money (what you earn and what you spend). Once if these baseline figures are available, it becomes easier for someone to understand the current financial position to act as a base for further financial planning. This can also put forth many pointers to identify if things are going to be brighter or not based on the existing situation. Once if you have the facts, it is easier to make thoughtful decisions about what you exactly need to get closer to the millionaire dream.
Mistake #2 Overspending
After owning a business or having some bucks in reserve, one starts to think of cozy lifestyles which the rich can afford. You may probably start visualizing luxuries as like a 5 star hotel accommodation or flying in business class. On the other hand, the wealthy people may be more of down-to-earth than what you may imagine.
National Debt Relief says that millionaires do not usually roam around in expensive cars like Lamborghini s. They may actually make their purchasing decisions more based on their actual need, current financial situations, and the goals to be met. They are rich only because they are good at keeping money and not overspending it. Even with their best budgeting approach, many people still find it tough to keep a tab on their spending habits.
Please do read: Why The Rich Show Off Their Wealth
In fact, if you want to be a millionaire, you should make budgeting a game which must be taken as a challenging affair. It is a game to see how much less you can spend on your groceries or even skip meals out or shopping trips. The key is to understand the nuances of your proper track to being a millionaire.
Mistake #3 Neglecting to adjust finances following a big life event
When your parents pass away or while getting married, people tend to forget about their existing financial status and start to spend blindly. However, if you postpone the process of adding your spouse to the will or canceling the joint account after divorce, you will start to see your bottom line getting a hit soon.
All life transitions come with many different sub-components as emotional, familial, spiritual, logistical, and more importantly financial. The most successful people will understand the fact that each transition one goes through has a serious financial implication and they take measures to plan it well to sustain through these turning points without getting financial harms.
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Mistake #4 Wasting cash on paying fees
The major difference between the wealthy and the rest is that the rich always watch where their cash is flowing to, and they effectively protect it by ensuring that none of it freely slips. You may be noticing that rich people rarely get caught for paying their bill late or their checks getting bounced. In fact, you may not even see them carrying a credit card of high interest just because they hate to handle cash.
As a human, it is possible to miss out things. So, the ideal get a rich fix now is to automate your bill payments. As we are bound to overlook the payment of a bill, it is ideal to set an auto pay-out from your account for the recurring bills like a car loan, mortgage, insurance, or credit cards to avoid a late payment penalty.
Recommended reading: How to Use Credit Cards to Your Advantage
The overall idea is to change from the spend more to save more mode if you really want to become rich. Remember millionaires are not into the business of simply wasting money, but they recognize the importance or additional earnings by controlling money to meet the financial goals quicker.
Mistake #5-Less Focus on Savings
There are several ways to save money. Direct savings, systematic savings through investments, mutual funds, provident funds, and many more options are there to save money. Whatever way you take, but you must save, and that is the game turner in wealth accumulation.
The motto must be to save as much as you can. First, save the maximum out of your earnings, and then invest the amount you can, and then finally spend the rest on necessities. That is the most reasonable way to handle money as long as you live and earn. If you succeed to save half of what you earn every month, then you will be close to your goal
Article contributed by: Isabella Rossellini
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