No one is perfect. We all make mistakes and we aim to minimize them so they don’t stand in the way of our goals. However, sometimes even the best of us can’t get out of our own way. This is especially true when trying to grow our wealth. Here are 11 mistakes we must avoid when trying to increase our net worth.
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Investing in Crypto
We all have that person at a party claiming they’re on the road to riches thanks to crypto. Here’s the thing, so few people know what crypto even is, let alone how to wisely invest in it.
Crypto is highly volatile and it’s possible to lose everything. If you don’t understand it, steer clear of the investment opportunity.
Playing the Lottery
The lottery is fun to play. However, it’s no replacement for hard work and purposeful planning. The average person spends over $250 a year playing the lottery.
That’s a small number, but many people spend considerably more than that. If that’s you, just think of how better that cash can serve you.
Investing in Penny Stocks
Some investors love the lure of penny stocks. They view them as the next possible Microsoft or Amazon.
The sad truth is many of them aren’t worth a penny. Many have limited trading, and burn investors. Worse yet, it’s difficult to find reliable information on many penny stocks. It’s best to stick to blue chips or index funds if you want to grow wealth.
Staying in a Dead End Job
Wealth is there for people who take advantage of opportunity. Unfortunately, not all employers offer the same opportunity.
If you’re trying to rise in your company and continue to hit roadblocks, it may be time to leave. Staying might be a mistake that’s keeping you from earning more and growing in your career. That’s also not to mention the opportunities that could come about from increased income.
Partaking in MLM Schemes
Multi-level Marketing (MLM) seems like a great way to build wealth. After all, those that promote them talk up how people in the scheme have yachts, luxury cars, and more.
The simple truth is this, less than one percent of people who participate in a MLM actually turn a profit, according to the FTC. You’re better served by setting your cash aflame.
Listening to Gurus
Suze Orman, Dave Ramsey, and their like do provide helpful tips. However, they’re often in business largely for themselves.
Furthermore, their one-size-fits-all approach doesn’t apply to everyone. Your situation is different from everyone else, and you need a plan that works for you.
Living Above Your Means
It’s fun to live a lavish lifestyle, but if you’re spending more than you make you will incur debt. That does nothing to build wealth.
Give every dollar you have a purpose and assign each one to your specific goals. This isn’t to say you can’t have fun, but wasteful spending will get you nowhere. Life is about balance, not overspending.
Driving an Expensive Car
Cars are horrible investments. They’re made worse if you have a high car payment. The average new car payment is nearly $720 a month.
Slash that in half and you cut put $4,320 in an IRA. There’s nothing wrong with a reliable and used Honda or Toyota, and they get you from point A to point B.
Not Having an Emergency Fund
It’s unavoidable, life happens. You need to replace a major appliance, or need a several thousand dollar repair on your car. If you don’t have an emergency fund, it’s likely large, unplanned expenses will end up on your credit card.
It’s best to have three to six months of living expenses in your emergency fund, preferably in an online savings account that pays a competitive interest rate. It takes time to build to that, so don’t let the amount hold you back. Building it up protects your wealth and helps you avoid debt.
Not Shopping Around
Every little bit adds up, and nothing is worse than buying something, only to discover it 15 50 20 percent cheaper elsewhere. That can add up.
Thanks to the internet you can compare pricing relatively easily. Use browser extensions like Honey by PayPal to find lower prices. That helps stretch your budget and put resources to other needs.
Not Having Goals
Your finances shouldn’t be a set it and forget it approach. Goals are important, and you need to check in on them regularly.
Without goals, you can’t know how you’re doing, and if you will build wealth. Worse yet, you have no idea how to change or improve things.
How to Become Rich Quickly
Everyone wants to become rich quickly. While not always possible, there are legitimate ways to become wealthy. Follow these methods and you’ll be on the road to riches.
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Mailbox money is a lot like passive income. You only need a little money to start to receive checks in your mailbox. Pursue these options to grow real wealth.
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I’m John Schmoll, a former stockbroker, MBA-grad, published finance writer, and founder of Frugal Rules.
As a veteran of the financial services industry, I’ve worked as a mutual fund administrator, banker, and stockbroker and was Series 7 and 63-licensed, but I left all that behind in 2012 to help people learn how to manage their money.
My goal is to help you gain the knowledge you need to become financially independent with personally-tested financial tools and money-saving solutions.