By now most people heard the saying nice guys finish last, well that is because they keep helping everyone before they help themselves. I am not suggesting helping others is wrong. I do feel you should be mindful of who you help and why. Some people are careless with their money and when they are out, they need someone nice enough to share their money with them. When you help anyone, you are sacrificing some of your time. Many people loan money they cannot afford to lend, and this causes unnecessary stress for all involved.
There are many forms of spending your money before you earn it. Some people just think of borrowing from a friend or relative is the only way. You have credit cards, advance payday loans, personal and car loans, and the biggest bill you can get a mortgage. Yes, especially a mortgage. This is an advance payment for 30 years. The differences between the average worker and a wealthy person are the wealthy person have assets covering the mortgage the average person must maintain their income for the next 15 to 30 years or they will have to lose or sell the property. I know people who borrow carfare on payday, in order to pick up their check. Others that borrow during that week to get a few dollars paying interest on the money. People need to budget their incomes or better yet learn a bit of discipline. More than half the time the things they cannot wait to buy are not an emergency to have. People only go into debt for wants not too often for a need. So, it can wait and you should get paid then go spending in that order.
Many times, when people make a purchase, they will look in their bank account or their wallets and see if they have enough money to cover the product or service. What they overlook is the true cost of the product and or service. For instance, when you go to the car dealer and you have your down payment ready, the salesman to have your car payment in the price range you afford. This might mean a low-down-payment or a low monthly payment plan. Once you get these two numbers in your head you are happy. You sign the paperwork and drive off the lot. Let us look at a few things you should have included with your cost. Insurance this could be nearly as much as your car note. Gas and maintenance are the main two that are commonly overlooked. The more you drive your car the higher both expenses will become. Please do not forget about repairs, oil changes, new brakes, and tune-ups. Some repairs are major things like engine, transmission, broken windows, and bodywork for accidents. Depending on where you live, do not leave out parking and parking fines. Add all these outside factors you could be looking at double your car payment each month. So, when you buy something like a car, house, or even a pet like a pedigree dog or an exotic small animal these are hard to track on what it will cost you overall. So, my advice if you cannot buy it 5 times you cannot afford it. I did not makeup that saying it was some smart wealthy person that could buy anything 100 times.
4. False Sense Of Giving Your Children A Better Life
I have grown up with a whole bunch of peers that felt that giving their kids a great life meant buying them all the things they wish they had growing up. When in fact the reason why they worked so hard to get a better life is because of the lack of having. Our children already have a better life. Their medical insurance is better, the choice of food we can feed them is better, their education is better even the clothes we buy them are better quality. Even still they have a need to purchase and enroll them into things the children did not even ask for. What is worst they will even keep this madness until they are up to their eyeballs in debt. After a few years goes by, the children now become accustomed to the lifestyle. Now the parents created a monster. The older the children get the more expensive this sort of behavior will become. This will cause the parents to use their paycheck, saving, credit, and sometimes even dip into their retirement fund. Not to mention taking on more hours or a second job. Thinking that you are helping your children when in fact by giving everything they become lazy and expect everything in life to just be handed to them. Now the parents are wondering why they can’t get their children to grow up and become a contribution to society.
You would think that working two jobs would make you more money. In some cases, it will but overall, you might end up losing more money than you made. You must decipher what are the advantages and do they outweigh the disadvantages? How much money would you actually walk away with? You could figure that out by subtracting all the expenses it takes to do the second job. Childcare if you have younger children. Taxes. Transportation. Lunch. Most importantly your health, for instance, are you getting sufficient rest? Without enough rest, your body will not be able to properly regenerate itself and thus making you more prone to sickness. Maybe if you have a second job right now look at your lifestyle since you started. If it seems like you are working harder and getting the same results or you feel you are getting deeper in debt, it’s time to quit that second job and save your time and money.
The first thing I do when I get paid is, invest in assets. After I add to my assets column then I knock out whatever bills I have. Then I would go and spend whatever I have leftover, usually, for me, that means saving more money because I generally have everything I need. So, I increased my savings which then add to my asset building. The purpose of this is you want to have as many assets as you can so after a while the assets would start generating your passive income. Passive income and compound interest are two of the leading causes of accumulating wealth since the beginning of time. Rich people do not spend money on frivolous things they buy assets, the profit from the assets gives them that lifestyle you admirer, that should tell you something. We keep spending our money trying to look rich, everything we buy increase other people's wealth. No one wants to sacrifice in the beginning but that is what buying assets are they are a long-term plan. You are not buying assets to become wealthy tomorrow you are buying assets to become wealthy in 30-40 years. Not to say that you cannot become wealthy in less than a year depending on what assets you buy. Normally you supposed to save and invest about 10% of your income. Myself, I make sure to take at least 60% of my income and purchase whatever assets I can. The reason being, I had a late start on investing and now I am playing catch up for all the years I missed out on.