Deborah Fowles, a US based financial writer, listed what she considered the most common roadblocks on the road to building wealth. Fowles says that many people will never reach their dreams of building wealth, being financially secure, and being able to retire in comfort. The reason is most often a combination of these following six biggest money mistakes:
If you don’t know where you’re headed and how you plan to get there, you’ll probably never arrive. To accumulate wealth, you need a plan. To be motivated to save money, you need something specific to save for.
If you are spending all your money paying interest on credit cards, you won’t have enough left for savings. A $2,400 big-screen TV can end up costing you $3,000 but you’ll never know it because the true cost is hidden in your credit card payments.
When you are in your 20s and 30s, it’s easy to think you have all the time in the world to accumulate wealth and save for retirement. The truth is, you will have to save a lot less if you start now and give your earnings time to compound.
If you are over 40 and you’re behind on your retirement savings, you’ll have to save much larger sums to ever catch up on where you should be.
Many thousands of people think nothing of paying for their home over 30 years, even though the average homeowner ends up paying two and a half times the purchase price of the home by stretching the payments out this long. Having a 15-year mortgage instead of a 30-year mortgage can save you large sums of money.
The reason so many people are in so much debt is because they dribble their money away in small, barely noticeable amounts. Like drops of water dribbling through the hole in the dike, the loss is barely noticeable, but over time the hole in the dike gets bigger and bigger. By the time the water is gushing through, the damage is done.
The same is true with spending leaks. It’s a lot easier to plug a small hole than to ignore the drips and look over your shoulder later and see a huge tidal wave of water coming your way in the form of unmanageable debt. If you’re ever going to accumulate wealth, you must control spending leaks.
If you’re not involved in your day-to-day family finances, you’re putting yourself at risk. If you’re married and you let your spouse handle all the financial matters, you’re at risk if your spouse dies or becomes seriously ill or if you divorce.
Know the details of your family’s finances, investments, debts, retirement savings, etc. Don’t turn your investments and financial affairs over to a broker or financial consultant without keeping abreast of what is being done with your money and being involved in investment decisions. Never give total control of your money to someone else.
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