AVOID 10 TRAPS that won't get you rich

Pic 01: Spends tomorrow's money.

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Dreaming of owning a big house, nice car and a boat? Or just having enough cash to be comfortable?

Here are 10 signs that you are not (yet) on the path to financial freedom.

You don't think about ways to make extra money

If you are paid a salary and nothing more, you are limited in the ways you can get ahead. The only way to save is to spend less. But if you switch it up and start to look for ways to earn more, your horizons open up.

Most of the world's super wealthy have more than one income stream - some of which are usually passive, requiring no regular input. This could be something such as rental income from an investment property or network marketing products that your social circle consumes such as Vitamins, Hair care, Beauty care and Health solutions. Add in some sensible savings habits and you will be on your way.

Can you generate some extra income with a sideline business, such as sharing ideas on how to look prettier and energetic?

You leave your savings in a savings account

If you stick your cash in a savings account, it is basically doing nothing. You are better to look at ways to put that money to work. You could put it in a managed fund, buy shares or even lend it out via a peer-to-peer platform, to get a better return. Make sure you get good advice to understand what you are doing.

You borrow to buy

Borrowing to buy a house is fine. Borrowing to buy a car is (generally) not. If you are putting all your purchases on finance or credit card and paying them off with high rates of interest, you are pouring money down the drain. Live within your means if you want to get rich.

You don't know where your money goes

The first step to getting on the right track is to have a clear idea of what you're spending money on. If you don't know, chances are you're wasting it.  Have a look through your recent bank statements, draw up a budget. Stamp out some discretionary spending and you'll have more of that money to put to work that we mentioned earlier.

You're putting off planning for your retirement

If you think you are too young to have to worry about the future, you are doing yourself a huge disservice. When you are working towards a long-term financial goal, such as retirement, time is a huge asset to have on your side. The power of compounding is the greatest opportunity you will have.

 

Albert Einstein said, “Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it. Compound interest is the most powerful force in the universe.”. The later you start business building income, the smaller your compounded growth in business.

You hate risk

It is great to be careful with your money but if you never take a risk, you miss out on returns. Over the long term, the biggest gains are usually from riskier investments, such as equities. You may also find ways to wealth by getting out of your comfort zone. Quitting your job and starting a new business is risky and scary, but could pay off if you have planned it well and know your stuff.

Learning on how to better present your business ideas could yield strong initial part time income and can snowball to surpass your fixed employee income.

You don't have a plan

If you don't know how you're going to get rich, it probably isn't going to happen. Write down your goals. What do you want to achieve this week, month and year? What about in 10 years? If you can, identify someone who is in a position you'd like to get to and find out what they did to get there. Work out what you need to do to follow suit and break it down into small, achievable steps.

You think you're bad with money

It's a self-fulfilling prophecy. If you think you are bad with money, you won't pay any attention to your finances and they will get out of control. Stop thinking money is some sort of secret club that you could not possibly understand. Everyone can get a handle on it.

You don't know the basics

You don’t study successful business leaders by mixing and surrounding yourself with positive innovative people. Instead you prefer to dwell on mundane unproductive topics with like minded people on office politics, food, sports, complaining about limited income and (perceived) injustices.

CONCLUSION

Be open to business ideas. Test your hypothesis and assumptions. Study and analyse the business opportunities by seeing case studies if the business model works.Look for business mentors who can guide you.

Source: SUSAN EDMUNDS