RCWEALTH

So often growing up, we see others being successful in life through adolescence, and we eagerly wait to get through school and start on our own to become successful. This is not a post about what defines success. However, I am highlighting “success” as owning a car, wearing the latest fashion, having a house, and affording entertainment at your leisure or running a business successfully.

As I said, this is not about defining what success is. This is specifically to highlight the dumb mistakes I’ve made with money that I suggest you avoid. Some of these, you probably would say, are common sense and you’ve already known and avoided yourself. Kudos to you. Maybe you already made some of these mistakes yourself; if so, you’re not alone. So without any further delay, here are the mistakes I made with money you ought to avoid.

Mistake #1 – Not having a budget…

Yeah, I know this one is quite obvious, right. But do most of us work with a budget when we get paid each month? Do we know where all of our money went? Or are you like many who are bewildered-looking at the amount of money that passed through your hands after a year and wondered where it all went? I realized that I was foolish trying to manage my money in my head. I held scenarios in my head of how I was going to use and manage my money well when I receive it. The problem was that my habits trumped my thoughts every time. Because I had a mental program that executed every time I had my money and that habit could not be curb or changed unless I had a written plan to focus on and counter those habits. Making a budget is a conscious plan that fights the unconscious spending habits that have been sabotaging our financial success.

Mistake #2 – thinking only for the short-term….

This is also as a result of not working with a budget. I had the dumb idea of spending all I made each time I got money without any plans or thought for the long-term. I kept my focus only on the lump sum being received monthly and plan my life a month at a time. Once I knew all my bills would be covered I then simply spent the remaining on all the things I saw and wanted, or thought I wanted in the moment due to some emotional hype from a sales pitch.

Mistake #3 – Getting a credit card…

Many will debate this but that’s a personal preference. I’m just sharing my opinion. Credit cards are not to be acquired without first getting education on what you are getting yourself into when you use that card. I didn’t realize that every time I swiped a credit card for what ever purpose; I was actually taking out an additional loan. Credit cards have the highest interest rates and penalty fees across all financial platforms. I was always maxing out credit cards feeling comfortable about the low minimum monthly payment required. Never taking into consideration the amount of interest I would be repaying if I only paid the minimum monthly. I walked with my credit cards as I did my debit cards and used them interchangeably. Dumbest financial mistake. This is one of the main reasons my debts grew. Because not only was I only making minimum payments. I was still using these credits for more purchases once a balance was available to be used. Hence my repayment would be extended, recalculated and be never ending if I kept up this habit. Now I can hear the many who say they clear their credit cards each month. That’s great. If you have the cash and earn enough to cover your purchases, fantastic. You probably should just save towards buying what you want. The building a credit line or credit history is another story. However their are other ways to get that done without a credit card. I believe that the idea of a credit card was spawned from hell to imprison us financially through the ease of access to credit. We ought to instead focus on disciplining our spending and avoid the chains and limitations of credit card debts. It’s not having freedom. That’s a lie. Get educated and stop racking up credit card debt.

Mistake # 3 – Starting a business while being broke…

I thought I could simply get a business started with a minimum capital and the business would start earning and pay for itself. Oh how wrong I was. Yes you need capital to start a business. However your starting capital must also include funds to run the business for a period of time. If not you should have some income generated else where to pump into your new business. It’s foolish and outright dumb to start a business because you accumulated saving enough to get it going. Don’t fall for that trick. Your business is like a baby. Your minimum capital was the sex to birth your child. But that child needs to be fed, given medical checkups, bought additional clothing etc in order for it to grow to the level of making a return. If you only have the minimum to start your business, it’s not time to start your business. If you do you’re only going to have an additional monthly expense cover. Adding an additional expense to your already barely surviving finances, is very depressing. So plan in advance and acquire additional capital to sustain your business while it grows to produce a profit.

Mistake # 4 – Getting into businesses I didn’t have any expertise in…

Again this one doesn’t come as a surprise to some of you. But I was foolish remember. You’ll are smart. I fell into the trap of the allure of the large sums of money a particular business can make and the returns that would make me financially comfortable and even rich after a certain period of time, blindly men to the basic facts that were right in front of me. Partnering in business ventures I had no idea of how things work is a setup for failure. Even worse is having a partner who is not proficient about the intricacies of the business. Don’t make business decisions on grand ideas of making money only. Too often we get carried away by these ideas because it gets us excited about the possibilities. Finally something that can help you achieve your dreams and cure your financial ailments. It’s a trap set in motion by our lack of emotional control and naivety. Become knowledgeable before making any investment or financial decision. My best advice on this area is to delay your decision making until you’ve comfortable acquired enough information. I’d rather you not invest and keep your money than get involved and lose your money.

Mistake # 5 – Having only one source of income..

This is where we all have a common struggle. I always thought I just needed the right job with the right benefits and the right amount of income and I’ll be set for life. Another dumb idea that I adopted from my environment. Having a single source of income is cause for worry, frustration and its not a smart financial decision. Again Im not debating this with anyone because most persons will have a different view. However for me I realize that having a single source of income can only cover expenses for probably one individual. Most persons raising families on a single income are denying themselves something or multiple things just to survive. In the corporate structure, your salary is based on your position and qualification. The main bottle neck is that the positions are limited. So even if you have the qualification, you still cant get paid until you are promoted to the position that pays the increased salary you need. With the depreciating dollar and rise in inflation which increases cost of living every year, a single income is continuously stressed and exhausted more as time progresses. So if one is comfortable just surviving then they will be fine reducing their consumption each year in order to continue to do so on the same salary. I would rather have multiple sources of income which gives multiple options to reach my savings goals and building on my dreams. Its easier to save for a house, car, vacation, Tuition, family trip or special occasion gifts from multiple sources of income rather than simple telling myself that I just cant afford it.

Mistake # 6 – Not starting my investments Earlier…

I was naïve during my twenties and didn’t even think about retirement, saving for a rainy day or setting aside any savings for emergencies. I was of the impression that money would always freely be something earned every month and always available. I thought there would some day be a big pay-out or big increase receive that I could use to make some grand purchase all at once. I thought that investments can be made any time and started when ever I was ready. But little did I know about the value of compounding. Where the earlier one starts investing and staying consistent the more money would be accumulated quicker with less amount invested, than starting later where it would require a lot more time and money to catch up (if at all) to someone who started years earlier.

I’ll stop there for this post. There are a few other mistakes I made which I may share at a later date or not. It’s not easy admitting your mistakes to the world and putting yourself out there for the critics. Maybe these mistakes can help someone to avoid going down this path and chart a better financial course for themselves. I hope someone finds value in this and avoids the traps of the mistakes I’ve made. In the final analysis I would encourage anyone to seek financial knowledge and advice before making any investment or before parting with any of their hard earned money. It’s better to hold your money than lose it any day. So don’t trust your own judgement. We weren’t taught the laws of money in school so we technically weren’t educated on properly handling money. So continuously seek education and develop ones IQ financially as much as possible. Find others who have done what you want to do and follow their advice. Stop taking the opinions of broke people. Everyone has an opinion. It doesn’t mean they are right. Model and listen to those who have gone ahead and have the results you want. Avoid their mistakes. You will save yourself many years of delay, financial stagnation and depression. Instead you will see your goals sooner and avoid the pitfalls that many didn’t avoid.

Blessings to your financial growth.