Money is a very delicate issue for many many people this issue can be so
contentious that instead of managing their money people will avoid the topic
altogether and solely focus on earning and spending it in short there are two
types people those who increase their wealth and those who lose it and in this
video I will share with you ten money mistakes you must avoid at all costs and
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life-changing content the truth is that keeping money is a lot harder than
making it it's not uncommon to see people who come into wealth through
inheritance lottery or other windfalls and lose it in a short amount of time a
good example of someone who earn a ridiculous amount of money but lost it
all is the famous boxer Mike Tyson despite earning over 300 million dollars
in his career in 2003 he declared bankruptcy and was reported to be in
more than twenty million dollars worth of debt needless to say that money
mistakes happen and these mistakes can cripple your finances no matter how much
money you make so let's get into the 10 mistakes that you must avoid number 1
spending on drugs or cigarettes doing a drug or two in college may have been fun
and seemed harmless in the moment but the truth is that constant use can have
negative effects on both your health and your wallet if you calculate how much
drug and cigarette users spend in a week or a year you'll see that many of them
are hamstringing their ability to reach financial freedom for example a pack of
cigarettes cost nine dollars and eight cents and many cigarettes smokers smoke
a pack a day this amounts to 63 56 a week or three thousand three hundred and
five dollars and twelve cents a year the same amount of money could cover the
property taxes on your home or a two week vacation but sadly many drug and
cigarette users fall into this habit through curiosity and peer pressure
the end result of this habit is a hefty toll on both your health and your wealth
in the long term as such try to avoid spending on these items as best you can
number two spending more than you make this can be tempting to do especially as
a young adult it can be tempting to blow your money right out of college when you
are making a consistent income for the first time in your life buying that new
car moving into a new house and flying first class
they're all appealing things to do but the problem with them is that you tend
to end up living paycheck-to-paycheck if your income can't cover these costs this
issue can be like into lifestyle inflation whereby an increase in earning
will cause you to increase your living expenses an increase in paycheck
shouldn't warn you to increase your cost of living however the majority of people
feel that they should reward themselves once they get paid instead this cash
inflow should be directed into prolonging your wealth through
investments and the acquiring of assets probably the biggest reason that people
spend beyond their means is to impress others they spend because their
self-esteem is low and without these material goods they feel inadequate in
comparison to others but this is flawed thinking as Dave Ramsey says we buy
things we don't need with money we don't have to impress people we don't like
many of us are guilty of this once you learn to delay gratification and forget
about impressing people you will then be able to grow financially social media is
another cause of overspending people try to spend huge sums of money trying to
look rich without actually being rich an internet entrepreneur for example who
after being told he would never make a big business might buy an expensive car
when he makes his first big sale in order to prove his critics wrong again
falling into the trap of trying to impress others this means of impressing
others is a never-ending staircase at all points of life there will be others
to compete with or to show off - you have no business buying a gadget worth
$2,000 when your monthly salary is just $3,000 be smart create a budget and
track your spending to ensure you avoid spending more than you make number 3
not investing wisely investments can be really tricky and many people put their
money into things based on tips from friends or a strong conviction that the
prices of popular stocks will keep going up one type of asset to just about
everyone seems keen on these days is real estate many people think that once
they own an investment property that they'll be financially set they think
that every month rent payments will just start rolling in and their income will
exponentially increase unfortunately this is not always the case sometimes
tenants missed payments appliances break or the value of your property declines
like all types of investments there is risk involved for the wise investor
the key to making their assets produce a reliable stream of income is to obtain
the proper knowledge about a particular market or product before putting their
hard-earned money into this adventure in short make sure to do proper background
work on whatever it is you want to get into and not just because your friends
are making money from it or a sales agent told you about the great benefits
it has to offer number four following get-rich-quick
schemes get rich quick schemes are one of the surest ways of losing your money
as the saying goes quick money brings quick problems and following a money
scheme is bound to get you in trouble get rich quick schemes include things
like Ponzi schemes pyramid schemes and make money overnight offers and are all
set up to make the scheme originator rich by taking your hard-earned money if
you are looking into new business ventures and see opportunities that
promise high returns with small risk then tread with caution think of it like
this if it takes 20 years in a career to make $200,000 and a new venture is
saying that you can make that amount of money in a year benefit was legitimate
wouldn't everyone be doing it in short when it comes to making money fast
always employ your best judgment before signing on the dotted line number 5 not
having an emergency fund let's face it life doesn't always go your way and
sometimes you need cash in order to rectify the situation you're in for
instance your car could suddenly stop working you could lose your job or your
washer could break unfortunately just about everything in life costs money
which is why not having an emergency fund set aside is a critical money
mistake sadly a 20-19 Federal Reserve study found that almost 40% of American
adults wouldn't be able to cover a $400 emergency with cash savings or a credit
card charge that they could pay off quickly about 27 percent of those
surveyed would need to borrow the money or sell something to come up with the
$400 and an additional 12% wouldn't be able to cover it at all luckily you
don't have to be one of these people saving these funds can be easy all you
have to do is set up a 10 percent automatic deduction from your pay with
your employer that will send a portion of your paycheck into an emergency
savings account but how do you know when you've saved enough most financial gurus
recommend you accumulate 6 months worth of living expenses but if you want to be
extra cautious than one year's worth is a great gold
number six having just one source of income for most people having a sole
source of income as a way of life and this income usually comes in the form of
a salary unfortunately jobs aren't as secure as people perceive them to be
in fact in 2018 alone US businesses laid off more than 21 million people meaning
that if your job was the only way you made money then all of a sudden your
cash inflow came to a halt when it comes to income sources you need to think of
yourself as a tree do trees grow fruit only from one branch the simple answer
is no they have different branches producing flowers and fruits and so
should you you should keep developing and learning
new ways to let your income work for you this is not only wise but a safe way to
help you sleep at night number seven relying heavily on credit
cards for many people credit cards can be a convenient tool for making
purchases but for others they can be a one-way ticket to dead although you need
credit cards for some business applications relying on them heavily can
ruin you financially the use of credit cards promotes impulse buying
it gives you the mentality that you can afford anything and everything all with
an easy swipe in fact a 2001 MIT study found that sharper spent up to a hundred
percent more when using their credit card to pay instead of cash so if you
find yourself uncontrollably spending on credit form the habit of paying with
cash instead when you pay by cash you are physically handing over money and
seeing the depletion in your wallet will make you feel the financial impact of
the purchase much more than when you pay on credit number eight being scared to
take financial risks as the saying goes no risk no reward and in order to make
money you need to take risks however the risks you take need to be
calculated for instance putting your money in an index fund is higher risk
than leaving your money in a savings account but your money will never grow
making the typical point zero nine percent interest at a savings account
yields instead investing in an index fund for example which mirrors the
movements of the whole stock market has historically provided returns of 7%
annually which is a calculated risk that in my opinion is worth taking
number nine saving rather than investing when you keep money in the bank it loses
value over time due to inflation however when money is invested wise
it grows it's that simple in mistake number nine I mentioned that being
scared to take financial risks is a mistake the people who are scared to
take risks are people who will save all their money and leave it to a road
overtime the only money you should be leaving in a savings account is money
for your living expenses and your cash emergency fund in short you have to save
to invest and not save for the sake of saving money saved without any actual
plan will end up being spent on things that are not worthwhile for instance
when you leave money in your bank you will become tempted to spend it on
material goods like a new car new clothes or entertainment instead you
should be getting that money to work for you by investing it whether that's in
the form of stocks real estate wreaths or startups all these avenues offer a
way to make new streams of income which is much more financially lucrative than
letting your money devalue when sitting in the bank
number 10 having only one bank account having only one bank account is risky
for a few reasons first having one bank account will make the management of your
money really difficult by working with just one bank account you have to keep
all of your emergency bill and college savings in one spot then if you splurge
in Spanish cash you may risk not having emergency cash or tuition money readily
available when you need it this is why you should have at least three bank
accounts one should be used for emergency funds in case anything goes
wrong another account can be for your day-to-day bills and a final account
which I call a play account your play account is what money you allocate for
entertainment or vacation and if you want to take things one step further you
should set up an untouchable account this account can be used as a savings
account that paycheck deductions are directed to every single month so you
can automate your savings process and ensure your wealth grows over time
thanks for watching if you want to go from the life you have to the life you
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you