Ten Money Mistakes that will keep you poor

Tuesday, July 14th, 2020 00:00 |
Money Mistakes that will keep you poor.

Factors that may prevent one from attaining financial freedom are many and varied. However, some of them are simple money mistakes one can get rid of with, minimal effort. 

1. Borrowing money that accrues interest to start a business. 

One common mistake people make is to borrow money hoping that the business will generate enough income to pay back the borrowed money plus the interest.

In most cases, that never happens and only serves to push the borrower deeper into financial trouble.

2. Spending first then saving what’s left

With this kind of arrangement almost nothing remains to save as one ends up spending more than he planned to.

New expenses keep popping up. By saving first before spending one always finds a way to make do with the little that remains. Put your savings aside then first then spend what is left.

3. Failing to invest your savings

Do not stop at just saving, invest your seed. By keeping your money as savings, you lose some of it to inflation, bank charges and so on.

There are various types of investment vehicles one can use to grow savings without necessarily having to go into business. Find out about them.

4. Lending out money you are not willing to lose 

Only lend out money you are willing to lose. When lending out money, understand there is a possibility you might never get it back.

If his failure to pay will not affect your relationship with him, then lend them money.

However, if their failure to pay will make you hate him and his people, please advise the person to borrow from a bank.

5. Signing as a guarantor without considering the consequences

Do not sign to be a guarantor if you are not willing or are able to pay the money on the borrower’s behalf. Many people have found themselves servicing loans they have no idea how the money was spent.

6. Keeping money within easy reach.

Unless you plan to spend money in the short term, the do not keep it within easy reach. Do not walk with tens of thousands in your pocket when your daily budget is only a few hundreds.

So doing promotes impulse buying. If you do not plan to spend the money in the short-term, just bank it.

7. Spending on things you can do without.

If you can live without buying a certain item, then don’t buy it. That money is better off invested in a place where it will make you more money. If you can live with the consequences of not buying a certain item, you probably don’t need to buy it.

8. Always spending more than you earn. 

 With this habit you will never attain financial freedom. Should anything happen to your income, even temporarily, when you are spending more than you earn you will end up in deep financial trouble.

Always ensure you are increasing your income streams while reducing your expenses.

9. Failing to balance between short-term and long-term needs.

Even as you buy assets that will make you money in future, you need to have one that is giving you money for short term use. 

There will always be hospital bills, school fees, and utility bills to be paid among other things. Having a lot of money in the form of assets that cannot be monetized easily, such as land will only see you live in poverty.

On the other hand you must always think beyond your short term needs that can be met with a monthly pay check.

10. Buying an item at a high price when you can get it at a lower price elsewhere. 

Buying an item at Sh5,000 when you can buy the same at Sh3,000 on a different street is a money mistake you shouldn’t make unless you have already attained financial freedom.

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