The Seven Biggest Money MistakesBy
There are seven big money mistakes investors make:
1. Not planning and budgeting our weekly, monthly, annual and lifetime financial goals. About 97% of households have no written plan, no budget for what they spend most of their waking hours pursuing: money. Not having a plan isn’t a plan. Blindly acting on autopilot like most people do with their finances is a huge mistake. Take one hour every month and 15 minutes each week to write down and review your business and personal money goals, budgets and cash flow. Designate a specific time to do this each week. For example, take 15 minutes on Friday afternoon and get your entire family involved.
2. Putting too much money on credit cards. Most people have numerous credit cards they use without ever thinking about it. Then, the next month, when they receive their statements, they are in shock as to how much they robotically charged without thinking about it. Set a budget and limit for your credit cards and track it every time you use it. Write down the amount and the running total so that you feel it and are aware of the debt each time you use any card. There are only two things that you need to know about money mastery: the first is discipline and the second is regret. You’ll either be disciplined or you will feel regret.
3. Not understanding the economic or trends that affect your money life. Most people either look for the easiest way to invest or the latest, greatest, hottest deal. They do not understand or take time to learn about economic or demographic trends that can devastate these decisions. The aging population, global competition and government debt can be like a 50 mph headwind working against your investment vehicles. Take time to learn, understand and think about larger economic trends that can affect your investment decisions. Things change all of the time and you must stay ahead of the curve and the herd.
4. Buying and holding stocks. Real wealth, real returns and real value are created through the velocity of money and investments. Buying and holding value stocks can work and could be a part of your investing portfolio. However, those stocks can represent value and equity that is not working for you at its highest and fastest rate. More than likely the institution that “holds” your stock is making money off of it every day. You need to learn and utilize the principles of the velocity of money. Equities and cash generate very little for you when they are locked away for the long term. Get your money and equity to move and generate more returns for you and your family.
5. Failing to educate yourself on money early in life. Where do we learn most of what we learn about finances and money? Who taught us and why have we been taught to buy things all of the time, drown in debt and lock our money away in financial institutions? Our financial institutions and government have taught us to do certain things with money and for whose advantage? We have to constantly question and educate ourselves as to what works best for ourselves and our family. Find out what the wealthiest people do and how they do it. More than likely it’s the exact opposite of what we’ve all been “taught” to do. Money mastery is a lifetime practice.
6. Trusting our financial advisors without question. If you were told that you needed a major medical operation, more than likely you would get a second opinion. However, when many of our financial advisors recommend something, we just do it. Never be afraid to ask the tough questions of your doctors or financial advisors. We should almost always get a second opinion. Perhaps, taking an extra 30 minutes could save you from an unneeded medical procedure or losing half of your life savings. Always try to verify everything and get all promises and projections in writing.
7. Giving total control of your finances to someone else. Whether it’s a family member, friend or financial advisor you must always take and be in control of your money. You must take the time to understand where it is, how it works and what is being done with it. Hold everyone and yourself accountable by reviewing financial documents at least monthly. Perform quarterly checkups and overviews of your progress, goals and cash flow. It’s your life, it’s your money, and you must be in control.
Robert Shemin is a best-selling author and public speaker who has shared the stage with Tony Robbins, Donald Trump and Robert Kiosk.
Robert Shemin is an active investor who has been involved in more than 1,000 deals. He became a millionaire by investing in real estate by the age of 32. He has a law degree and an MBA from Emory University. Robert is an expert on wealth for CNN as well as a frequent guest on national, regional, and local television and radio programs. He has also been interviewed or quoted in over three hundred newspapers and magazines, including the Wall Street Journal, Business Week, the Los Angeles Times, the New York Post, and the Miami Herald. He is a New York Times Best Selling Author many times over including his latest book entitled, How Come That Idiot’s Rich and I’m Not?
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