The 5 Most Common Money Mistakes (and how to avoid them)
I seem to be on a "practical money" stream of consciousness lately, don't I? I do love talking about the inner game of creating wealth and abundance but you do need some of those "man-made" rules of finance once you have removed the kinks from your garden hose of abundance. So here goes . . .
Below are some of the most common money mistakes that I have seen folks make over my several decades of being in the traditional financial and tax fields.
#1 - Not Starting To Save Early
Yep, one of the biggest wealth building tools is "compounding" and the impact it has over a long period of time is just incredible. If you're in the stock market, it's not the compounding of interest so much as holding onto your shares to realize the appreciation in the value and to benefit from any annual dividends (which I hope you are reinvesting to buy more shares)
CLICK HERE to download a chart that illustrates the power of this principle. You don't have to make a ton of money to accumulate wealth. It is more about consistency.
#2 - Living Beyond Your Means
This is usually more inner game problem than practical money issue so if you feel this is you, please just call me, okay? If you are trying to maintain a certain "appearance" of a lifestyle that you really can't afford, you are just asking for trouble. You really have to question your motivation for doing it. Is there some inner void that spending or living this way fills? Maybe you have a "battle vow" that I have talked about in previous posts which will cause you to experience feast and famine cycles in your money. It is best to uncover the underlying reason and then practical measures can be taken to limit spending and regain control of your finances.
Also, I'm definitely NOT saying to have dreams of having more than you have or accumulating whatever it is you want - I fully support you creating whatever your little heart desires and I believe it is possible. BUT, it is possible to live within your current income limits, have dreams and goals and buy things you want as you can afford them. You can always live in abundance, which is more of a mindset, even if you need to control your spending. They are not mutually exclusive.
#3 - Paying the Minimum Amounts on Credit Cards
The interest rate on credit cards is ridiculous so if this applies to you, please make every effort to pay more than the minimum payments so that you can make a dent in the balance for goodness sake. There are many types of debts you can have but credit card debt is about the most onerous in my opinion because of the extremely high interest rates. It will also weigh you down energetically so the sooner you can get rid of that, the better. To pay more than your minimum payments:
- Skip your Starbucks $5 coffee
- Reduce how often you eat out
- Cut your cable TV (there are so much better ways to spend your time anyway)
- Get out library books instead of buying them
- Question every purchase you make and if you don't really need it - it goes toward the credit cards
- Beg, borrow and steal to whatever extent you can to come up with more cash to put toward the balance (just kidding but not really)
#4 - Not Taking Advantage of Pre-Tax Savings Opportunities
You are going to get sick of hearing me talk about this one but I don't care. I really want to help you and most people would rather pay themselves (or anybody) instead of Uncle Sam, right? Sock away money into your 401(k) if you are employed or into your company retirement account if you own a business. Why?
Because Tax Deferral (along with compounding) are two of the biggest wealth building tools you have!
CLICK HERE to download an example of the power of tax deferral over the long term.
#5 - Acting Like An Ostrich When It Comes To Money
This is pretty common. You've heard people (or maybe you are that person) say things like:
- I'm just not good with number
- My spouse takes care of everything
- My accountant takes care of everything
I've got some news for you . . . NO ONE CARES ABOUT YOUR MONEY AS MUCH AS YOU DO! Try to overcome any angst you have about dealing with it because as is usually the case, what you postpone now will come back to bite you later. Look for the underlying issue. . .
- Did your parents never talk about money?
- Was it a taboo subject in your house or town?
- What is causing your resistance?
Again, once you clear the inner game, especially with respect to this one, you will all of sudden be more open to dealing with, the right people will show up to help (and you will actually trust them) and you will no longer be like an ostrich - or if you are, at least your head will not be buried in the sand!
If you have any questions at all, please comment or email me at email@example.com
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About the Author
Kimberly Adams is a Business and Wealth Coach, Speaker and Author. She has the unique combination of having spent decades in both the tax and financial world as well as decades devoted to personal growth and transformation with many certifications in coaching, speaking and energy healing