The number of wealthy people is currently on the rise across the world. Most rich people will always advise you to spend little, save a lot, and invest a lot. But when you try to implement these simple tips, you perhaps encounter many hurdles.
This happens to people who do not fully understand the three money mistakes that everybody makes at some point in their lives and how to fix them. Here are the errors and their most pertinent solutions.
Drowning in credit debt
A credit card is an excellent shopping instrument, but it can as well be the cancer ailing your finances. The most dangerous thing to do is fail to pay off the full balance of a credit card. Credit card companies are legally bound to inform you the duration it will take you to pay off the balance if you settle the minimum amount each month. But with most credit card companies in the US charging an average compound interest of 16 percent, the black hole of debt will keep growing and growing and can eventually become very difficult to fill if you fail to pay some of the monthly installments. Once you receive a credit card bill, plan properly and dedicate every spare penny at hand to paying off your credit. Doing away with your debt is the first step to getting rich.
Spending to make you happy
Most people err when they spend too much to be happy or feel good about themselves. This good feeling is always temporary. You must get a handle of your emotional spending because mixing money with feelings is purely a toxic combination. The long-term benefits of preparing a real budget and shopping within it far outweigh the temporal emotional gratification of retail therapy. This does not mean, however, that those who aspire to become wealthy should never shop with their emotions. They should, instead, create a small budget to cater for the psychological comfort of their families, but nothing more.
Expecting frugality to be fun
It is a big mistake to think that committing fully to eliminate debt and saving money is fun. When committing yourself 100 percent to be debt free, be prepared to deal with a certain joylessness that might creep in after a while. The idea is not deprivation. In fact, that is not what a credible financial adviser can be advocating for. The apposite solution, just as I have provided above, is incorporating spending on fun things into your budget. The budget should cater for things such as getting your hair done, going out for lunch, or going on to a vacation. This way you remain on your financial growth track while still enjoying your splurges without feeling guilty.