There are many steps you can take to help you achieve financial success, but all your hard work will be wasted if you underestimate the financial success you want to achieve. The financial steps to success are important, but understanding the actions that will ensure financial failure is just as important. It usually only takes one financial mistake to erase much, if not most, of the financial progress you’ve made. Here are ten of these mistakes that you want to avoid or resolve immediately to ensure the long-term health of your finances.
1. Spend More Than You Make
This is the basis of all personal finance. If you can’t live within your means, you will find yourself in financial trouble no matter how much money you make. While you may be able to find a way to spend more than you make for a while, it will eventually catch up with you. At some point you will have to make a difference and when that point comes, your finances will not be happy.
2. Live Paycheck to Paycheck
While living paycheck to paycheck may seem better than living beyond your means, it still guarantees failure in trying to meet your financial goals. Again, this applies no matter how much you make. Paycheck to paycheck for life fails to take into account the unexpected expenses that are part of life. While you may be able to put off the paycheck to paycheck game for a while, it will only be a matter of time before something unexpected lands you in a debt pit that is difficult to escape from.
3. Trying to keep up with the Joneses
Jones is not a competitor. In fact, what they do and buy probably has nothing to do with your financial goals. The reason the Joneses may seem attractive is because you have failed to understand your financial goals. By accepting the goals of the Joneses (who may not know their true financial goals because they may be trying to keep up with the Smiths) instead of finding out what financial goals are really important to you, you have guaranteed that you will never reach them. see. Forget the Joneses and take the time to figure out what’s important to you.
4. Not Knowing Your Financial Goals
If you don’t know where you’re driving, you’re unlikely to get there. The same goes for your finances. To be successful, you need to know where you want to be financially. The way to achieve that is to know what they are and map out how to reach them. Not knowing your financial goals is like wanting to go to a vacation destination with a blank map.
5. Letting Money Control You
It’s not about how much you make, but if you make enough to do the things that matter most to you. Money is a means to an end, not an end in itself (after all, it’s nothing more than a piece of paper written in ink). Financial success does not depend on how much you have, but rather whether you can achieve what is important to you with the amount you have.
6. Failure to Develop Yourself
Your education does not end when you leave school. If you are not willing to improve yourself, you and your finances will stagnate. Self-improvement is a never-ending process (who knows if it’s perfect?) and an important part of maintaining your long-term financial well-being.
7. Trusting Others to Take Care of Your Money
It’s rare that those who take care of your money have the same interest in what ultimately happens to your money as you do (perhaps they are more focused on making money for themselves, not you). While it’s perfectly acceptable to rely on others to give you suggestions and help you think through financial decisions, you should always be an integral part of the decision process. If you rely on others to take care of all your financial interests without you having oversight, you shouldn’t be surprised when money is invested and lost in ways you would never have allowed if you had known.
8. Invest in Things You Don’t Understand
If your goal is to quickly lose your hard earned money and start from square one again (or even in the hole), start investing in things you have no idea about. The problem is not that investing is bad in itself, but that most investments have risks and the only way to check them is to understand the investment. If you don’t know what you’re doing, that usually means that others who do will make money at your expense. No matter how much Uncle Joe talks about how great an investment it is, put your money somewhere else until you’re sure you understand everything about it.
9. Being Financially Fearful
Just as being aggressive can guarantee financial failure, the fear of taking any risk at all will always guarantee it. Growing your money to meet your goals means taking calculated risks that work in your favor over time. Failure to do so will result in your finances treading water, if not sinking, and unable to reach your goals.
10. Ignoring Your Finances
It seems that many people believe that if they just ignore their finances, then things will get better or take care of them somehow. Although it is a good hope, it is nothing more than a fantasy. Reality says that ignoring your finances will lead to all kinds of problems that ultimately ensure you fail to reach your financial goals.
These are some of the common mistakes people make that end up hurting their finances. By avoiding these financially damaging steps, you will greatly increase your chances of meeting your long-term financial goals.
(Photo courtesy of Nick Allen).
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