Financial literacy: 15 mistakes | Alex

Money problems don’t stop once you make money.

How many times have you heard of athletes and entertainment stars going broke when they were once worth millions of dollars? There is no definite plan on how the money should be spent and most of the time we end up in a financial mess even though we had good intentions.

So what are these mistakes you can make when you have money? Well, let’s find out together.

1. You equate extravagance with success

Our society’s influencer culture has made it seem like people aren’t rich unless it’s obvious enough for the world to notice. It is very easy to be swayed by this and start making expensive purchases to look the part.

You end up spending money on vacations, cars, other luxuries, or lifestyle treats not because you need them, but because you want to impress the internet.

2. You don’t reinvest a lot in the business

Reinvesting is essential for the growth of everything you do. By definition –

It is putting back your interest or any other form of income derived from an activity in said activity in the form of capital.

With the current flexible life in our society, many people earn money and spend it entirely without reinvesting part of it in their business. This results in total stagnation or slow growth.

3. You can’t find a way to evolve

What gets you 10,000 a month won’t get you 100,000 just through a few small changes. You need to build a scalable system.

Growing your business is just one aspect of scaling it, a more accurate meaning is that you can handle the extra workload profitably and achieve your goals without suffering or overstraining yourself. Does the money-making business have the potential to grow? Many people feel comfortable with their production as long as it is profitable without making an effort to adapt and improve.

4. You don’t invest in people to help you grow

When you start making money, it’s easy to push everyone away thinking you can support yourself.

If you own a small business with a small, well-functioning team, you might not think that spending money on things that will make others better will also have an effect on your overall productivity. It’s easy to feel like a one-man army when you bring in a lot of money.

5. You pay yourself first

When most people get a job and start earning a lot of money, they start spending a lot on themselves. Yes, you should reward yourself from time to time, but you should only do this after you have made your money work for you and have some more.

A major mistake most people make is to splurge here and there with a “money is made to be spent”.

6. You don’t make comparisons before you buy

When you’re broke to buy anything, you have to check out three to five vendors and compare all cost and convenience before making your purchase, but that all changes when you have enough money to get what you want.

With money, most people decide to jump on the first thing that catches their eye without bothering to check out the best prices. If you take the time to do a little research, you can save hundreds or even thousands of dollars in a year.

7. You ignore your credit score

Your credit score plays an important role in determining interest rates, fees, and more.

When you have a lot of money on hand, you tend to neglect your credit. after all the credit is not really necessarybut over time, this will trigger higher interest rates that will cost you far more than you should be spending.

8. You keep unused subscriptions

How many subscriptions do you have that you barely use?

The average person spent about $350 a year for services they don’t use or need. One mistake people make when they start making money is subscribing to multiple platforms and paying membership fees for services they don’t actually use. Even when they notice a recurring subscription, they won’t bother canceling it. $10 a month may seem small, but it can add up to hundreds of dollars a year.

9. You spend impulsively

Do you often make involuntary purchases?

Money and emotions go hand in hand. It can be simple to walk into a store and indulge in some retail therapy when you’re bored. Impulse buying can be triggered by the stress, desperation, and even elation that comes with having money. If you didn’t have the money, you wouldn’t make these purchases. So, now that you do, there’s the constant urge to stroll to the mall or spend time surfing online stores.

10. You keep chasing small gains

You don’t need a lot of money to start a business or to invest, but it’s common practice and a big mistake for many people to keep chasing small gains when they have the resources to do so. much better.

While it’s good to play it safe and follow a risk strategy wisely, it’s also important to keep an open mind to unique opportunities.

11. You practice lifestyle inflation

Yes, lifestyle inflation is a thing and most of us are guilty of it. When you have money, you increasingly want to improve your lifestyle to match your financial situation.

You started earning six figures so you should be living in a four bedroom apartment and your Toyota isn’t good enough, a Maybach is more like it. This is both inconvenient and risky because it creates a number of problems you should want to avoid, such as spending more than you earn and racking up credit card debt.

12. You quit your job

We all work to earn money and live our best life. So when you have that money, holding down a job might seem pointless, and then you quit.

There’s nothing wrong with you quitting your job, but most people do it without thinking about what’s next. The sudden void created by your resignation will have to be filled one way or another. See where this takes you – you’ll end up looking for thrills and spending impulsively.

13. You take too many risky bets

A common mistake people make when they have money is to up the ante and risk a lot more than they should. This mostly happens due to their belief and ability to recreate whatever made them money in the first place.

A common example is retail traders – a strategy that made them millions will suddenly wipe out their account because they had blind faith in the strategy that got them this far. What has worked in the past will not necessarily work in the present or in the future.

14. You chase trends

When you have money, it’s easy to buy the latest and invest in projects without researching them properly.

If you are approached with a business idea and it sounds good, you commit a substantial sum to it without thinking about the long-term pros and cons. Money is meant to be spent and you want to invest as much of it as possible. You have good intentions, but the results will not always be good. Trends don’t last forever, they eventually come to an end, and if you’re not careful, your fortune could be wiped out.

15. You trust people with your money without proof.

When you have money, you often trust people close to you and sometimes complete strangers because you get along well with them and it seems natural. You might even go so far as to overlook documentation, showing that they are qualified to handle your finances because you don’t think it can do much harm.

If you just follow your emotions, you will have lost a lot of money before you realize there is a problem. When it comes to people, ignore your emotions here and look for solid evidence at all times. Make it a rule not to do business with individuals if you are so close to them that you don’t want to be strict with them.

As Robert Kiyosaki said –

“It’s not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it.”

It’s okay to make mistakes as long as we learn from them. However, we don’t always have to experience certain things. We can learn from other people’s experiences and take home key things we should pay attention to.

Remember: The decisions you make today and the routines you establish today can impact the rest of your financial life. You must consciously avoid these common pitfalls that arise when making money.

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Geraldine L. Melton