Are you holding yourself back from becoming wealthy? There is a good chance that you might have a few wrong ideas about money. Take a look at four of the biggest concepts people have that cost them big in the long run.
1. I Can Start Saving When I Make More
Many people think that they can not afford to save money just yet. They are convinced that once they make a little more money, they will start saving. Unless you are at the poverty line, this is just not true.
There is almost always room to save some money today. If you can not put something away into savings, you are probably living beyond your means. A good budget will always have savings as a big part of it.
Waiting until you make more money to save is not a horrible idea, but it never happens. Lifestyle creep starts to come into play. You get a raise and start making more money and it becomes very easy to start living just a little bit better. Just enough to spend that extra money and keep you from saving.
Instead of waiting until you make extra money, make it a point to start saving now. Re-write that budget and pay yourself at least ten percent of your gross pay first. Put that into a retirement investment account and then divide the rest of the money out into your other expenses. It might mean making a few sacrifices for now, but it will be well worth it in the end.
2. I Am Too Young To Worry About Retirement
When you are in your twenties and even your thirties, it can be easy to think that you have plenty of time left to save. Why worry about saving now when I have the rest of my life to do so. Right now, it is time for fun.
The fact is, you need to start saving just as soon as possible. Money saved now is far more valuable than money saved in the future. If you wait until your forties or fifties to save, you will have missed out on 20 or 30 years of compound interest.
If you have put off saving, it is never too late, but the sooner the better. Every day you do not save is a day that you lose interest and returns on your money.
3. It Is Okay To Carry Debt
There really is no such thing as good debt. Sure, having a variety of credit and loans is good for your credit report, but that does not make it good for your wallet.
The only really good loan is a 0 percent one. If you manage to score one of these loans on a new car or similar purchase that is great. If you are paying interest, you are making somebody else money. Even a low interest 2000 dollar loan left over from school is costing you money that you could better use elsewhere.
Make it a point to pay off that debt as soon as you can and then you can re-purpose that interest you are paying for savings and your retirement.
4. I Do Not Want To Miss Out
The fear of missing out or FOMO is a huge reason that so many fail to save money.
People always want the latest products, they want the newest vehicles, the best clothes and they do not want to miss out on anything. Truthfully though, you can not have it all. Even if you spend every dollar that you earn on buying what you want, you will miss out on something.
Learn to draw the line and save money. Still treat yourself from time to time but just face the fact that unless you are a millionaire athlete, you can not have it all and you are going to miss out on something. The hot tub can wait until you have a healthy savings. No where to draw that line.
5. Investing Is Too Risky
Yes, it is true that investing has its share of risks but if you start investing early in life, the risk is mitigated by time. You could potentially lose some money in the short term but in the long run, you are better off investing.
This is why so many financial advisors advise you to change your investment strategy over time. The greatest rewards come with the greatest risks but you should only be taking these risks when you have decades to build your wealth.
As you get closer and closer to retirement, you begin lessening your risks, getting out of things like stocks and into bonds and other safe investments.
If you are young though, investing is risky but well worth it. If you want wealth at least.
As you can see, there are a lot of ways that people get in their own ways.
If you find yourself doing any or all of the things above, make it a point to change the way that you think about money, investing and retirement. You will be glad that you did.