Did you know that 77% of adults worry about money every single day? This is because money can solve most of the problems we encounter daily. If you had more money, you could pay off your debt and live comfortably, spend more time with your loved ones and the list goes. However, most people, myself included, keep repeating the same actions that aren’t yielding then financial success. Hopefully be sharing the money moves that I wish I stopped sooner, you can see the financial progression you want!
Number #1: Relying only on a paycheck
First off, you’ll never be rich if you rely on a paycheck for money. Now, some people believe it is possible to become rich by relying only on a paycheck but the results prove otherwise. Just by looking at the list of the richest people in the world, you’ll realize that none of them got there by depending on a paycheck. Most of them are entrepreneurs, business owners, and investors. Also, by looking at the average person, you’ll realize most people who rely on a job have just enough money to get by.
However, that’s not to say having a 9–5 job is bad but if you truly want to become rich, then you have to do what rich people do. You can start with a paycheck but you should have a side hustle or use it as a launchpad to start your own business. Some of the richest people in the world today once depended on a paycheck but they had bigger dreams so they didn’t stop there.
Furthermore, one of the reasons why you will never be rich if you rely on a paycheck for money is there is a limit to how much you can earn. Every organization has a fixed salary structure and sometimes you may be required to work for many years to make more money. However, there is no limit to how much you can make when you work for yourself. You can decide to introduce a new product or expand your business to increase your chances of making more money. But you don’t have such privileges while working for others because you don’t make the decisions.
Therefore, if you only rely on a paycheck for money right now, I want you to consider other means of making money so you can avoid this mistake that I made for many, many years.
Number #2: Saving every penny you make
I know this may sound strange to you but saving every penny you make won’t make you rich. I know it’s very important to save money but what I’m saying is, you won’t become rich this way. Saving money only gives you easy access to it when you need it in the future. If you want to become rich, you need to learn how to invest your money to make it grow.
Let me show you how you’ve been losing money by keeping it in a savings account rather than investing it. Think of how much you bought some of your household items and daily needs for 10 years ago and compare the prices with what you have today. You would realize that most of the prices, if not all, have increased. So if you saved $1,000 ten years ago, you would not be able to use it to purchase the same quantity of goods today. The reason why this happens is inflation. When you save money, you are losing part of it because the value erodes against inflation. However, when you invest, you give your money a chance to grow at a faster rate than it’s declining.
Now let’s see a practical example of how it’s financially savvier to invest your money than to save it. Assuming you started saving $1,000 every month from age 20 and you continued saving the same amount until you were 70, how much do you think you would have? You would have saved a total of $600,000! This sounds like a lot of money until you see how much you would have made if you invested that money instead. Assuming you started investing $1,000 every month at a 10% interest rate from age 20 for just 25 years. How much do you think you would have when you become 70? You would have accumulated a over $1.3 million by investing!
So you see that it’s easier to achieve financial freedom by investing rather than saving money.
Number #3: Succumbing to quick money schemes
Sometimes we may be tempted to search for quick ways of making money because of how urgently we need it. However, you will never be rich if you succumb to quick money schemes. They are everywhere you go from your friends at work to social media and even in those annoying spam emails filling up your inbox. Several adverts are popping up every day with the guarantee that you’ll make more money within a short time but most of them are fake. Therefore, if you want to become rich, you must learn how to identify such schemes and stay far away from them.
For example, there are Ponzi and Pyramid Schemes which promise you a high return on investment within a short time. Although their promises are usually too outrageous to believe, they may come from a close friend who has evidence of payment from such schemes. These are all part of their gimmicks to make you lose your money. They pay a few people to make it seem real but once they can get enough money, they’ll disappear into thin air.
Other quick money schemes include gambling and the lottery. Although some people do make money through these means, there are too few that it cannot be regarded as a reliable source of income. Making money requires work and dedication so you have to be careful when you see promises of “free” money that don’t require you to do anything.
Here are some of the things most quick money schemes have in common. Firstly, they promise you high returns with low risk. If the promise is too good to be true then it probably is. Secondly, they put pressure on you to invest immediately. They claim the offer is only available for a short period of time so that you rush to hand over your money. However, it is better to miss out on what you don’t understand than losing money. Lastly, most of these schemes require you to do nothing, That is, you just send money to someone and expect it to multiply in few days. If you ever want to avoid this money mistake, then you should avoid these schemes at all costs!
Number #4: Thinking you know everything about money
Don’t ever be tempted to believe that you know everything about money even if you have a Ph.D. in finance. If that was the key to becoming rich then professors teaching money-related courses would be the richest people on earth today. When you think you know everything about money, you tend to develop a mindset that makes earning more money even more difficult.
There are always new things to learn every day, especially about money. That’s why reading is one of the major habits of some of the richest people. They know the world is constantly changing and some of the information they acquired a few years back may no longer be relevant. Therefore, they make sure to read every day, listen to audio courses, or attend seminars amongst other things.
By being open to learning, you can discover new ways of doing things that are more effective and faster than how you currently operate and this can be critical to making more money and becoming wealthy!
Number #5: Failing to set any money goals
Another reason people are failing to succeed financially is that they aren’t setting money goals. Most people are going about their finances blindly and they’re wondering why they’ve not become rich. Without a goal, you don’t know what you want to achieve or when you’ve achieved it. Therefore, if you want to become rich, you must learn to set goals and achieve them.
One of the benefits of setting money goals is it gives you clarity. For instance, if you have a goal to make $100,000 in a year, you know what you want and it becomes easier to achieve. However, if you’re like most people, you’ll only wish you could make more money and that’s all. Making more money is not a goal but a mere wish and it is difficult to achieve. Also, setting money goals helps you to discover ways to achieve them. Have you ever thought of doing something and all of a sudden, you begin to discover different methods to achieve them? This also works with money. When you have a money goal, you begin to discover several ways to make more money.
Furthermore, having a money goal motivates you. When you have a goal of making $100,000 in a year and you just have $10,000 after 4 months, you will be motivated to get back to work and make more money. It also forces you to focus and eliminates all distractions. When you know where you are going, you won’t waste time on unproductive activities and that means you would achieve more when you have a goal. Again, goals are important because they allow you to measure your progress.
So how do you set money goals? The simple method to set a money goal is to follow the SMART goal framework. That is, your money goals must be SPECIFIC, MEASURABLE, ACHIEVABLE, REALISTIC, and TIMELY.
Number #6: Only spending time with other broke people
Did you know you are a reflection of the closest people you spend most of your time with? If you spend time with 5 lazy people, you’ll soon become the sixth. In the same way, if you spend time with 5 broke people you’ll soon become the sixth. Therefore, avoid the mistake I made and surround yourself with people who will allow you to rise to new levels. This is so practical that we see it every day of our lives. For instance, the brightest students in a class are often friends who walk together and share ideas. Also, people who are friends in a workplace often earn a similar amount and spend their day doing the same things. Again, the reason for this is not far-fetched. Humans are social beings and we learn from our interactions. If you make friends with broke people you will end up doing what they do. You’ll buy things on credit, you’ll be lazy at work, you’ll give excuses and above all, you’ll be broke. However, when you spend your time with other rich people, you’ll do things that they do which gives them money. You’ll learn how to manage your money and control spending. So check your 5 closest friends today and if they’re not forcing you to be better then you must find others who will!
Number #7 Thinking being rich is just about getting lucky
Finally, you’ll never be financially successful if you think being rich is just about getting lucky. Some people think that you have to be born into a wealthy home or buy the winning lottery ticket to become rich. However, the statistics prove otherwise. Most of the richest people in the world today are self-made millionaires and billionaires who started from humble backgrounds. They didn’t have any special advantage over others but they were willing to work harder than those around them.
My only definition of luck is when preparation meets opportunity. No one gets rich doing nothing. You must have a plan and start taking action. Start working earlier than everyone else does and stay later and sooner than later this hard work will pay off!
Therefore, you’re now equipped to sidestep money moves that I wish I had known about sooner!