Financial Mistakes That Rich People Do Not Do

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Financial Mistakes That Rich People Do Not Do
Financial Mistakes That Rich People Do Not Do
Photo Credit: utah778 / Bigstockphoto
Kumar Sunil

Kumar Sunil

Dreamer & Enthusiast

Creative. One word says it all for Sunil. A engineer, an enthusiastic and conscientious Information Technology consultant by profession, Sunil shares a special interest with entrepreneurship and lifestyle.

HIGHLIGHTS

  1. They are not impulsive buyers.
  2. They are not after fake show-off.
  3. They never buy big things on credit.
  4. They are not into the concept of mortgaging.

Someone asked me, who is rich, and who is poor. I replied, “one who is earning $100, spending $90 and saving $10 – is a rich guy. And, one who is earning $100, spending $110 and to do so, borrowing $10 – he is a poor guy and will die poor.

Google for any financial advises and you will have an encounter with countless search results diverting you to financial portals and discussion forums. Financial advises are everywhere, but seldom they have the suggestion you really looking for. Most of the results will be talking about what you should do or how someone from the grass level became a millionaire. But, no one tells you about the financial mistakes that rich people do not generally do.

Investment in Personal Development

I have seen people who consider investment in personal development as a waste. The scenario reminds me of a Benjamin Franklin’s famous quote, “investment in yourself generates most rewarding.”

Instead, sticking to one skill and dedicating your life to it, it is always better to keep your options open. To do so, you need to improve your skills, hence personal development is important. In simpler terms, if you want to prosper, you must upgrade yourself and you must invest in yourself.

Overspending on Entertainment

I have seen people spending a lot on entertainment. The reason behind it is, brainwash done by the entertainment industry. They are making us believe that happiness is all about watching movies, promoting consumerism, eating out, or traveling here and there.

As a survey, hundreds of young adults (21-35 years), spend one-third to half the salary on entertainment. Whereas, rich people use the time and money to finance their dreams.

Buying on Credit

Many people buy items that they cannot even afford. Just to keep their social status on fire or just to impress people, they buy those things on credit.

But, at the end, when they are forced to pay their EMIs and other substantial rates on borrowed money regardless of their financial situations, most of them develop suicidal tendencies.

However, if a person hopes that at some point he is going to make good money from the project, he will use his credit card for the development and promotion of his business, and not to fund personal expenses.

A Hide From Your Spouse

Millions of couples do not talk about money. This topic makes them feel uncomfortable and often leads to fights. You must understand that money gets multiplied when two members of a households have a clear picture of their finances.

Mortgaging The House

Some people say that rich people mortgage homes and they never buy one on a cash basis. But, in reality, they are not so rich. Mortgaging the house will put you into an endless loop of refinancing, EMI payments, and inflation rates. When you mortgage the house, you are likely to pay two times more than the initial price. A rich man prefers to stay in a rented property until they can buy the house with cash.

Spending on Low-Quality Products

Unlike others, rich people don’t try to save money by buying cheap products. There is no fun of buying a $10 shirt that will be replaced everything month or two, instead of buying a 40 shirt that will keep you four months better. In simpler terms, rich people aim at long-term profit/loss, whereas a poor will always aim at short-term profit/loss.

Get Rid of Consumerism And Improve Your Savings

Most people spend their money on goods they don’t even need. I have seen many people accumulating money for something they really can do without. We need to get rid of this impulsive behavior and this because this is the only solution against consumerism. By not buying the useless thing, you can save a lot of money for other productive things, thus, improved savings.

Financial success is all about making money, using that money to make more money, and repeating step one i.e., making money.

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