THE 7 BIGGEST MONEY MISTAKES

The 7 Biggest Financial Mistakes

Here are the 7 biggest and often the most common mistakes people make.  These critical mistakes keep people in financial bondage, preventing them from making bigger positive contributions in this world. Most people do not get financially educated and go through life with the wrong money views living paycheck to paycheck thinking that it is normal to live this way. Have you ever wondered why financial literacy is not taught in our schools? How good is it to work hard if one does not know how to be a good steward with the fruits of one’s labor?

Here are the big 7:

1.      Failure to invest in themselves. This is the biggest mistake people make. Investing in yourself is also the safest investment you will ever make and bring you the greatest return. Don’t wait for others to invest in yourself. Never be a mercy of someone else to invest in you. Invest in your financial literacy and invest in your continuing self-education. I am not referring to investing in the credential type of education. Practice what you learn and acquire new skills.

2.      Failure to build an emergency fund. Expect the unexpected simply because it will happen. Cars break down, houses need repairs, kids need braces, etc. The emergency fund is for emergencies and should always be there. If money is needed, use it, then replenish the fund. Prevent hell breaking lose when something happens that money could fix it and you don’t have the money to fix it.

3.      Failure to pay themselves first and save. Save a minimum of 10% of your income and save it. Get used to doing this any time you get paid. Saving is a great habit and it can be put on auto. Build targeted savings. Earn before going out and spending money you don’t have. Hard truth and easy not to do it but the consequences are the difference between being financially secure/free and always chasing money.

4.      Failure to invest. Most people spend when they should save and save when they should invest. This happens because people are financially illiterate; they lack basic financial understanding of money. The proper money sequence is understanding, earn, save, give, invest, and spend. What do most people do? They do the opposite. They go out and spend then go to work to earn it. Also, most people don’t follow the right money hierarchy. The put money on the riskiest ventures because they want to get rich quick. When we violate the basic principles, the live with the consequence of living broke.

5.    Not living within means. Finance lifestyle. Financing liabilities is a pure sign of financial illiteracy. Know the difference of an asset and a liability, an expense and an investment. Unless you are a master in personal finance, never finance a liability, especially things like houses, cars, entertainment, etc. Acquire assets instead of liabilities. Spend what is necessary and invest once you can afford to lose.

6.      Listen to the wrong people. Stop listening to broke people. Get rid of the instant millionaire mentality. Practice long term thinking, delayed gratification, and leveraging the power of compounding. Wealth is created slowly at first, then all of a sudden; the same applies to going broke. Only listen to financially free people with a track record of results. Listen to Warren Buffet because he has a lifelong track record of financial results.

7.      Bad financial thinking. Think more money solves their financial problems. Stop and think where you acquired your money views. Keep score of your money. Know your net worth and track it. Have a budget and follow it. Have a solid financial plan. Get rid of debt, invest in yourself to earn more, and make the right investments to reduce tax liability. Chase your purpose instead of chasing money!

Pride and ego keeps people in financial bondage

Financial insanity is to work for money in a job you don’t like to pay for things you bought on credit so you can impress people you don’t like!

The truth will set us free but not before it makes us really mad for our mistakes!

Carlos Fontana

Financial and Leadership Coach

(Get out of debt, make more money, pay less taxes)

"Those that take swift action will always leave those that don't breathing the dust"

"The future belongs to those who can see and pursue opportunities before they are obvious"

“Managers influence numbers, leaders influence people by inspiring them to pursue excellence”