Money is this subject that not many of us like to discuss about, it is this subject that we want to keep as far from our conversations as possible. In fact, many will admit that they would rather discuss politics, death or religion instead of talking money. If the previous statement makes sense to you, chances are that you may not know a lot about these money mistakes. Don't worry we got your back, here are the 10 mistakes that may be furthering away your financial freedom.
1. Not having a clear budget
Imagine that you have a bottle filled with water that you can drink from. Now imagine that you can only drink from this bottle of water. This bottle of water has to be the only bottle you can drink from for the next 30 days. After that period, it will be refiled. How would you treat that water? Would you try to manage it and increase its quantity? Or would you drink from it without even looking? See a budget like this fixed amount (water) that you have to manage well and want to increase every month in order for you to survive financially.
2. Making major purchases entirely on debt
Buying on debt should only be made if you can have a certain ROI (Return of Investment) out of the deal. Otherwise it won't make you rich and chances are that it will make your seller some bucks. True that it will benefit you with some rewards and a good credit score if you can payback your debt quickly, but in the long run try to avoid this behaviour, it is dangerous if you depend on one single form of income.
3. Depending only on one flow of income
The wealthy will all agree on this: wealth is created by generating income, "multiplying" a certain income through investments and estate purchases for example. Having one single flow of income is like having only this one bottle of water that you can drink from.. imagine how it would feel amazing for you to be able to have two or more bottles of water. No more thirst and a feeling of prosperity, this is prosperity. If you want financial freedom, increase your income and generate multiple flows.
4. Not negotiating
This is huge, negotiating can help you save from few hundreds to thousands yearly. You can negotiate almost everything, starting from your redundant bills to your rent or mortgage. Many of us get caught in ideas that prevent us negotiating more. Thinking that it is fixed price about something is not going to help. if you are a good customer and have years of loyal payments to your name with every company that is issuing you reccurent bills, chances are that you can give them a call and ask to negotiate your bills. Think about negotiating like a must do next time that you are entering an agreement or buying something of value!
5. Not educating yourself
This one is important, by educating yourself you should understand: reading articles, books, watching videos, listening to podcasts or even going to conferences that teach you the good financial habits. Educating yourself should be your starting point if you starting point, doing so will fix your "money mindset" and get you going on the good track.
Coming back to point number 1, if you have a fixed amount of available water to drink for 30 days, your number 1 job would be to avoid unnecessary expenses that may reduce your water (money) below critical levels. Remember, if it is not important, don't spend on it, yet.
7. Not having an emergency fund
Having an emergency fund should be a must for every person who is independent financially, it is important to understand that these types of funds are there to serve you in case of an emergency. They would make and you and your family feel safer and relief you from unexpected stresses.
8. Spending while in debt
There are different types of debts, depending on the amount you should always consider paying back your debt entirely as soon as possible. This behaviour is what will be the difference maker in your freedom. The equation is simple: no debt = freedom. Unless you have a certain ROI out of your debt, avoid it.
9. Underestimating the value of your credit score
Your credit score is like your financial transcript, it says how good you are in paying back what would have been lent to you. Neglecting your credit score will close many opportunities for you in the long term if it is no of go good quality. So, in order for to have a good credit score start by understanding what your credit card regulations and requirements are, then use it wisely by paying back immediately what you would have borrowed.
10. Not having a strategy for your finances
This is the most important of all points, your financial success will depend greatly on the clarity of your goals, the details of your plans and the quality of your execution. A successful strategy starts by having your end goal from the get go. Your strategy must be well thought and you should be able to act upon it without much difficulty.
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