Once you have build your business, surely you may see floods of cash coming in your bank account. Your next step is to engage in impulsive spending.
Be Warned, If you truly want to create personal wealth, then you need to ensure that you’re not making some common money mistakes. Here’s a list and how to avoid them;
The first and biggest money mistake that you can make is to spend more than you earn. People who do this will never prosper financially, These people are always broke or in debt, which is not where you want to be. So, if you want to prosper and build wealth, then you need to ensure that you earn more than you spend and that you control your finances and your spending habits, such as by using a budget.
#2 Paying for convenience
It’s good to spend money on yourself and sometimes it’s worth it to pay for convenience. However, you need to make sure that you maintain a balance. Do you eat out a lot instead of cooking food at home? Or, do you buy lunch everyday at work instead of packing your own food?
This may be convenient and tasty, but it’s going to cost you a lot more money over the long term if you do this on a regular basis. Hence, paying for convenience is fine at times, but if you do it too often it could have a negative effect on your finances.
#3 Being an impulsive buyer
Impulsive buying is driven by our emotions and we all do this. When we see something we want we will often buy it without thinking about it. However, the irony is that most of the items, which we buy, often fall by the wayside where they remain unused and forgotten. In short, they are a waste of money.
Of course, impulsive buying is largely inevitable and it would be difficult to eliminate it completely. However, you should try not to be impulsive with big purchases, as this is where you could waste the most money. Rather think about it for a while, compare the prices, features and benefits of the product and then go and get it if you still need it.
#4 Misuse of an emergency fund
It’s important to have an emergency fund. The money that you save in this fund is essential for unexpected expenses when things go wrong. However, you must decide what exactly is an emergency and then make sure you don’t spend this money on anything else.
Don’t be tempted to misuse your emergency fund, or you won’t be financially prepared when a real emergency occurs.
#5 Not doing maintenance
Failing to do maintenance on your car or home may save you some money now, but it could cost you a lot more at a later stage when things have to be repaired or replaced instead of just maintained. Spending a few hundred now to service your car or fix a leak in your house could save you thousands later on a broken car part or major water damage, for instance.
In addition, you should also take the time and make the effort to maintain your health. Getting sick or landing up in hospital is not only expensive, but it will affect your ability to work and build wealth.
#6 Not reviewing your finances
You should sit down and review your finances at least once a year. Can you get cheaper insurance elsewhere? Should you change your gym or medical aid? Have you tried to negotiate better rates? Can you reduce your number of accounts?
Reviewing your finances will give you a clear idea of your financial position, which will help you to monitor your income and expenses as well as reduce unnecessary costs and save more money. It’s not difficult to stop making these and the benefits will be well worth it if you want to prosper financially.