fredtheinvestor

fredtheinvestor

30-05-2022

12:31

We are all guilty of reckless spending. But not everyone learns from their past behaviours. Here are 8 biggest money mistakes I see people make:

1. Cutting spending instead of raising income Spending has lower limits (i.e. you have to eat), but income has no upper limit. Find small ways to grow your income today that turn into big ways to grow it tomorrow.

2. Not thinking like an owner Do you know who the wealthiest sportsperson in history is? Not Cristiano Ronaldo or Messi It's Jerry Richardson. Never heard of him? Me neither. He made his wealth from owning Hardees franchises. Be an owner. Think like one too.

3. Timing the market No one actually knows the future or where the market is going. Being right about something and making money on it are two different things. Timing is the differentiator. You are not the exception. Don't time the market.

4. Too much emphasis on small wins vs big wins You'll drive across town to save R200 on a television, but won't spend 3 hours preparing yourself for a salary negotiation that is 10x more impactful. Saving R200 is great, but making R50 000 more a year is even greater.

5. You borrow too much They say it takes money to make money, which is why borrowing money and investing it can be such a profitable strategy. Unfortunately, if things go south, you could lose it all. When borrowing money there are no guarantees, except your monthly payment.

6. Too much lifestyle creep Some lifestyle creep is fine, but the data suggests that spending more than 50% of your raises pushes your financial inde* further away When good fortune comes, enjoy it. But don't forget about your future. More on this here:

7. Investing in assets you don't understand If you can't explain it to a five year old, then you probably don't understand it. And if you don't understand it, then you are probably taking risks you can't even imagine. Keep it simple and buy simple investments.

8. Paying attention to other peoples' finances Some people are going to be richer than you. Some by skill and some by luck. Don't worry about them. Focus on how you are doing relative to your financial potential. That's the only one that really matters anyways.

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