One of the characteristics of successful people is that they know how to efficiently manage their personal finances and not make big mistakes with money.
But they were not born scholars.
They invest in financial education and thus understand how they can avoid the main threats and mistakes that stand in the way of prosperity.
Here are 7 mistakes with the money that rich people do not do and 7 tips:
1. DO NOT spend more money than they gain.
The main skill in money management is to spend less money than you earn. Some of the planet’s richest people have applied this principle in full.
For example, Sir John Templeton, one of the largest investors in the world, saved 50% of his income, even when he earned little. But if you save that percentage of income seems too much to you, it’s no problem. You can achieve financial success and save only 10-15% of your income, or even less.
Tip: Learn to spend less than you earn.
2. DO NOT focus on price, but understand the importance of value.
The price you pay for what you buy is just a part of the overall picture. Successful people also think about the value of the goods.
When investing, they consider the possibility of increasing these businesses. As far as personal things are concerned, they are always interested in the quality and lifespan of these products, not just their price.
Tip: Buy quality products that last for many years.
3. DO NOT throw money on interests and commissions, know how to manage bank accounts.
A credit card is very expensive because of the high interest you have to pay. Successful people are very careful about commissions, such as how much they pay for using the ATM or other transactions.
These commissions are easily avoided if you understand how the system works and you can choose a great bank account.
Tip: Review your account statement once a month, and you’ll understand the charges and fees charged by the bank.
4. DO NOT forget to adjust their financial plans after a major change in their lives.
Did you get married soon? Waiting for a child? These are a few important financial steps that successful people manage efficiently.
It is essential to make financial adjustments when the circumstances of your life and your family change significantly.
Tip: At least once a year, you should carefully analyze your life and financial plans (preferably with a financial specialist).
5. They are NOT satisfied with a fixed income but always seek ways to increase their income.
Some people will never ask for an increase in salary, or they will simply be pleased with a 1-3% increase. Unfortunately, such a rate of growth is lower than inflation, which means that it virtually reduces your purchasing power. Instead, successful people are constantly looking for new ways to increase revenue.
Tip: Go to courses that improve your professional training and try to contribute with ideas to increase the productivity of the company you work for.
6. They DO NOT claim to know absolutely everything about money.
Successful people know that the world we live in is very complex. When it comes to personal finances and money, there is a lot of information available. That’s why successful people like Warren Buffett know their limits and focus on their strengths.
Tip: Continually improve your knowledge of money and investment. If you have not done already, read the most important books in this area.
7. Do NOT take unnecessary risks.
Warren Buffett has remained famous because he said “the number one rule is never lose money.” But all types of investments have a certain degree of risk.
So successful people use two important tools to avoid losses. They understand the role of insurance (buildings, cars, life, etc.) to control certain risks, but also the great importance of diversifying investments.
Tip: If you are not too sure you understand how a certain financial instrument works, just act slowly and ask questions until you really get it.