Financial Aid: Why Smart People Make Big Money Mistakes
Let’s be honest. We all want to be wealthy, rich and well to do, but the simple truth is that wealthy people tend to understand and do things the rest of the none wealthy don’t understand. From mindset to action they follow behavioral rules when it comes to making wealth, and these rules are what separate them from everybody else.
I began to examine my own experiences in creating personal wealth. I have looked at those around me, and as well observed my parent’s financial life and each of these taught me so many things I believe you too need to live a wealthy life and balance financial life. There are many story worthy learning something about financial depression of the 30’s, the recession of the 70’s, or the that of the 89’s. Each would not only teach us more financial strategy, but to change the mindset of ours if we tend not to think like monkeys.
Like that of a story I read about how a monkey is caught in Africa using a native method. They hollow out coconut shell by cutting a small hole at one end. The hole is small enough to barely allow a monkey’s hand. Inside the lowed shell they place a few peanuts. They connect the coconut shell to a thin, strong cord and wait in hiding for the monkeys. When a monkey discovers the nuts inside the shell he reaches in the grasps them in his fist to escape. At this precise moment the native pulls on the cord and the monkey, who won’t let go of those peanuts to save his life, is caught.
Too often, most of us grew up in environment with wrong thoughts about money and wealth that we hold tightly to our own peanut ideas for the fear that we may lose them… when all the while, it is these very ideas that hold us captive and prevent the freedom we long for.
But if you love wealth like I do, you’ve also got to know intimately what you want, why you want it, and how you think you are going to get it, what you are going to do with it after you’ve got it – stuff like that. And this brings us to look at Financial Aid: Why Smart People Make Big Money Mistakes which are:
1. They waste time procrastinating When To Invest
As a young man, I made many errors because I too time procrastinating what I should apply action while I needed to invest. Because I was holding to my peanut of losing it. But at the end, it didn’t make any financial improvement for some years, I suffered financial depression. But thank be to the maker of men (God), I delivered myself by learning what works. [ Earn 10% of your investment every 3 months in Abuja]
If you are out at the sea and it cuts up rough, you make for a safe harbor. Any port in a storm. You don’t spend time procrastinating over whether the harbor has shower facilities or a branch to your favorite restaurant chain or cheaper moorings. No, you just get the hell out of the storm, while there’s still space in the harbor, and be grateful it provides the one thing you really need – safety.
Making money is a bit like that. Sometimes you just need to act. As long as you get some return on your action, it’s better than doing nothing. This is complicated but you’d be amazed how many people over look this and think ‘I’ll decide how to invest that little lump sum I’ve saved up later – I can’t decide whether to buy shares or put it in a saving account. So they do nothing and the money sits in a current account earning no interest or, worse still, gets frittered away by default and inflation.
You don’t have to think too deeply about this stuff. You don’t have to think too hard. You don’t even have to really think at all.
2. They Assume Their Job Can Lead To Wealth
I am not against you having a job, to which having a job is good. But here in African 95% of adult believe you must have a job or work for someone to be seen as responsible and wealthy.
It is commonly held in our society that finding a good job, work hard and moving up the ladder to more responsibility will eventually takes us to golden retirement years of wealth and happiness. The fact of the matter is that a job merely supports the habits we have (like eating) … but it rarely leads to wealth. As one shrewd observed put it, “wealth is when small effort produces large results. Poverty is when large efforts produce small result.”
No matter how you love your job, expecting it to make you wealthy is like looking for gold in a salt mine if your large efforts are only producing small results you had better check the road map. You may be on a road to poverty.
The answers is not to work harder, but to work smarter. A job should be looked upon as a temporary inconvenience. It is a method for generating cash flow for living expenses while you are setting up an automatic means of making wealth. A job is necessary for a while, but don’t forget the other part of the equation as your automate goal is to acquire ownership. A generous source of income which flows to you regardless of your job.
3. They Assume Saving Money Is A Good Investment To Wealth
How many millionaire do you know who have become wealthy by investing in savings accounts? I am not against the important of saving your money. Saving money is good. In fact, it is important to the wealth building process. It is not the money saved that is important, but the discipline required to save it. But don’t expect your savings to carry you to wealth.
I see most people save money and still remain poor. These monies are things that could actually change their life if invest into a profitable business and investment. Even the seemingly exciting high interest rates paid by the popular money market funds are not enough. Assuming only minimal inflation and taxes, it doesn’t take a Ph.D. in finance to realize that any dollar that earns less than about 15% per year is a losing venture. At the best it is a slow liquidation to wealth.
There is nothing wrong in economizing. There is a place for it in the scheme of wealth. However, if your goal is to become wealthy, you must learn how to save smart. The money you save is only parked temporarily in liquid, interest-bearing accounts waiting for a better place to invest.
4. They Think Of Debt Being A Bad Idea
Most of us grow up in places where they tell you don’t borrow money from anyone. Avoid debt! Well it may be true to avoid such debt if its consumer debt. Avoid it like a plague. Avoid borrowing money to buy the “appearance of wealth” which lose value and are often worthless before the debt is repaid. [Bad Debt: Recognizing Good Debt From Unconscious Bad Debt]
Sometimes self-made wealth never comes without going into debt. I repeat: you can never become wealthy without going into some form of investment debt. And probably a lot of it.
It is true that debt is terrifying to most of us. It signifies bondage. Ironically, the only way we can develop a sizable nest egg and stay out of long-term financial bondage is to go into short-term debt. You can actually borrow your way to wealth. The importance of investment debt is that it makes you understand debt.
5. They Are Obsess Of Security
Our entire society is obsessed with security. We demand social security, job security, and insurance security. But security is an illusion. Those who place too much faith in security often end up trying to put out fires with empty water hoses. Would you feel financially secure if you had to rely on an almost insolvent social security system?
How dangerous it is to assume that security is good! The more you love security the more likely you will avoid risk. And if you avoid risk, you also avoid opportunity, because risk is the price you pay for opportunity. You can’t hate risk and hope for financial freedom.
Risk is an essential part of progress. Earn to view it positively, as an essential step in the road to wealth.
6. They Have Wrong Assumption About Failure
I used to be ashamed when I fail trying to discover new things about what I should know in business, career and relationship. But as I grow matured, I realized those days were actually important to build me up for the day we are now and the future to come. I now understand failure is part of success. A very important part if you develop a positive mental attitude about failure, you can learn a great deal from it.
You will develop ingenuity, flexibility, and an ability to create new ways of achieving goals. When you fail for a time to obtain something you really want, you join the rank of discovering your direction. “what people don’t realize is that successful people often have more failure than failure do. But they keep going.” This is to say, you don’t drown falling in water, but you drown by staying there.
One good failure can teach you more about success than four years at the best university.
7. They Measure Wealth In Material Possession
So many people have so many definition of wealth, but “True wealth is not in material possession. True wealth is the quality of ideas you can generate from none existing substance to create values and make impacts. – Desmond Ajugba”
Wealth is thoughts, not things. You can be wealthy without having lots of money. And you can be rich and not be wealthy. Wealth is a state of mind – an attitude. Henry Ford was once asked what he would do if he lost all of his possessions. He replied, “I’d have them all back again in five years.” In other words, he might be temporarily broke but he would never be poor. He had a wealth of experience and knowledge to draw upon.
And above all he had a positive attitude about this ability to create wealth and knew that if he had done it once, it would probably be easier the second time.
8. They Take Responsibility To Blaming The Government For Their Financial Failure
The truth is that no government is responsible for your personal success. And this was something our forefathers did understand, there was no welfare system to look after them. Each person was responsible for this or her own financial welfare. They had to scratch out their own existence.
Today, people have ceased to assume personal responsibility for their financial well-being and assume that the government is responsible for their needs. And we expect government to bail out everything from defunct major corporations to insolvent municipalities.
But the truth is that, the government doesn’t solve your financial responsibility. The answers lies in us. We alone are responsible for our ultimate financial welfare. The sooner we realize this, the quicker we can start on the road to wealth.