Published On: Sun, Nov 5th, 2017

Personal Finance: Money mistakes that would keep you poor 

There are a lot of postulations about wealth and wealth creation that have been preached for centuries that people do not interrogate diligently. So, they go in vicious circle trying to make money, because they have been ill-informed about wealth creation. As a result of this, many people make a lot of money, but are far away from wealth creation.

It is a common knowledge that income earners hardly become wealthy. While income earners often don’t pay attention to money as they should, the wealthy respect and pay attention to their money knowing that nothing multiplies without attention. And when you take your eyes off money, you would always be lacking money.

Consequently, if you are aiming to become wealthy, you must avoid these mistakes that most income earners make:

Seeking comfort

A lot of people go around with the notion that they have to seek to be comfortable. But nothing is more inimical to abundance than comfort. It is very dangerous to finance growth. Unfortunately, many income earners are always seeking for comfort. The wealthy seek freedom and so much abundance that money is no longer dependent on their efforts. More is the mantra, abundance is the affirmation, comfort is not on their menu and freedom is the focus.

Fragmentation of investment

Financial experts often stress the need to diversify one’s investments. This has a limit to which it can improve your financial status. You can never get truly wealthy by diversifying your investments. Having your investments scattered could be injurious. It is wise to be the best you could be in a sector and get all the expertise you can about it and continue to work at expanding it from time to time rather than have your investments fragmented in different segment of the economy that you know little or nothing about.

Mark Cuban says, “Diversification is for idiots.” And Andrew Carnegie counselled, “Put all your eggs in one basket and then watch that basket.” So, if you want abundance financially, explore the area you have the best of knowledge on. Bill Gate made wealth by exploring the maximum of his knowledge in computer programming, today, Microsoft is a money-spinning machine.

Dependence on single income flow

Irrespective of how fat your income may be, never fall into the trap of depending on one stream of income. If you are presently earning a N1 million per month, something may happen that would hit the industry where you were working, which may lead to mass purge of workers and you may be affected. That is the end of your single income flow. You are suddenly backed to square one!

To create wealth, you must make investments that will create dependable streams of income flows, independent of your main source of income. You can invest in real estate where would be earning rental income while you are working elsewhere. You can also enter into partnerships in other companies to throw off passive flows of income. And you would continue to pay attention to each of these flows to make them stronger. This should not be confused with diversification, it is known aswealth fortification.

Gauging yourself with others

The scriptures say they that compare themselves are fools. It is foolish to want to live like your neighbour when you are not earning the same pay. Comparing your finances to others will ensure you never create wealth. Another person’s finances, good or bad, will not pay your bills, won’t provide for your future and will not provide you peace of mind. Don’t compare your finances to someone else’s.

Investing in trends

Avoid investing in the latest and greatest technologies that can be displaced by new technological developments. You get your fingers burnt by investing in what is in vogue. It is wise to invest in goods whose demand is inelastic like food, fuel, real estate etc.

Don’t get on the roller coaster. Take the longer, slower ride that guarantees arrival.

Trusting blindly

Most times, we allow our emotions to get better part of us. We trust people with our hard earn money without carrying out proper check on them. And in no time, we lose the money we have entrusted them with.

Disregard your feelings when it comes to doing business with people and always look for solid evidence. If you are so close to people that you are not willing to ask them to provide evidence, make it a policy not to do business with them.

Saving for the sake of it

It is impossible to create real wealth just by saving money. The banks pay just about 3 per cent on savings accounts. And you must not withdraw up to three times in a month; otherwise, you lose your interest for that month. To worsen issues, the charges banks collect on savings accounts are often higher than the interest they pay on your savings each month. Note that money that sits around idle always seems to find an emergency to fund.

To create wealth, you have to move surplus money into future investments accounts that you would easily have access to.

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  1. Rawlings says:

    You are absolutely correct.with this pattern you remain stagnant and struggle financially.

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