If you are like most people, then you are probably making several mistakes with your money, and you don’t even know it’s happening. These mistakes very often fly under the radar. They are hidden. But, the results are not. Making the wrong money decisions keep us from building wealth and prevent us from achieving our goals, and the results can be drastic. If you want to earn more money and build life-changing wealth, make sure you’re not making these five stealthy money mistakes. 1. You’re Not Exploiting Your 9 to 5 JobMany people believe that you cannot build wealth working a 9 to 5 job, but I’m proof-positive that assumption is untrue. Your 9 to 5 job offers plenty of opportunities to build wealth for your future, and it all starts with your organization’s benefits. For instance, many companies offer:
A lot of companies offer a “company match” if you invest in their company-sponsored 401(k). This means the company will match your contributions up to a certain percentage of your salary. This is free money and a great way to build consistent wealth over time.
2. You’re Following Your PassionHere is an uncomfortable truth: Our passions don’t tend to pay our bills. Our passions are those things we do without having to worry about earning a full-time income. Fishing. Word-working. Working out. Golfing. Cooking. Our passions bring fulfillment. Our strengths, on the other hand, do pay our bills. Our strengths are very often different from our passions. Strengths are the things we’re naturally good at. For example, if you’re a natural problem-solver, a career in information technology or computer science might be right up your alley. If you like numbers, maybe accounting. Love talking to people? You could make a great salesperson. You might love to work with your hands and build furniture, but you’re far more likely to build serious wealth with your skills and strengths (i.e., computer science) than your passion (building furniture). 3. You’re Only Saving 10% of Your Salary“Save 10% of your income, and you’ll be fine” is the most outdated piece of money advice that exists today. Why? Inflation is killing the value of the dollar. As a result, everything is more expensive today than it was five years ago, and this same economic phenomenon will continue. Don’t just save. Invest. Aim to invest at least 20% of your salary in index or mutual funds. If you can’t invest 20% yet, that’s fine. Work your way up. Write down a tangible goal and work to achieve it. For instance, let’s say you’re investing about 5% of your income today. Make a goal to bump that up by another 5% (for a total of 10%) in two months. Then, in six months, double that. Note that this might include cutting back on unnecessary expenses and building better money habits to free up extra money to invest. But trust me, your future self will thank you. 4. You Don’t Have an Emergency FundYour emergency fund is your lifeline. If you don’t have money set aside for a rainy day, you’re living your life at risk. Your emergency fund is money set aside for an unexpected expense. It is money that we can use in an emergency situation to help live our lives, save our lives, or make our lives just a bit easier. For example, emergency funds are used for:
Emergency funds are critical. Here are a few tips for building your emergency fund. Separate your e-fund from your checking account. Resist the temptation to save your emergency fund directly in your main checking account. Why? Because that money will be far too easy to spend if it’s housed with everything else. Instead, physically separate your emergency fund into a different account. Aim to save 3 to 6 months of living expenses. For example, if you typically spend $4,000 a month to live (including rent, insurance, food…everything), then you would need to save between $12,000 and $24,000 in your emergency fund. Start saving as much as you can. If you have no emergency fund (or just a small fund), it can be tough to think about saving six months of living expenses. Remember that emergency funds are not built in a day. If you can only save $200 a month for a while, then do that. That’s okay. Start with whatever you can, then slowly increase that amount as you make more money (or reduce your expenses). This isn’t a race. Make it automatic. I am a huge fan of financial automation. Automation takes discipline out of the equation by setting up automated routines that will help you build your emergency fund. And, most banks offer online systems that let you easily set up recurring monthly transfers. 5. You’re Not Paying Off Your Credit CardCredit card debt is the worst type of debt, period. Why? Because it’s high-interest debt, and credit card debt destroys your credit score over time. The average credit card interest rate is over 16%, which means you are paying 16% more than the original price of everything you buy because you did not pay off your credit card in full at the end of the month. Think of your credit card as a convenience, not a way to spend money that you don’t have. Credit cards offer many benefits, including cash-back, travel points, and even warranties on some of the things you buy with the card. But, you need to pay off the card each and every month for it to be worth it. Always pay off your credit card. Always. This article was produced and syndicated by Wealth of Geeks Via https://mylifeiguess.com/hidden-money-mistakes/
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April 2023
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