7 Common Money Mistakes to Avoid for Financial Success

This is your year to finally start your journey to financial freedom.

But, building wealth takes time, and your discipline is just as important as your knowledge on financial literacy.

It’s important to remove any bad money habits before you start taking on risks like investing or starting a business.

So, here are 7 common money mistakes you need to avoid in 2024.

Ignoring Your Financial Situation

A lot of people aren’t happy with their financial situations, and as a result, they ignore it.

Are you one of these people? Be honest!

It might be hard, but the only way you’re going to be able to start making changes for the better is to stop the habit of ignoring your financial situation, and taking a deep dive into where you can improve financially.

It could be:

• Poor spending habits.

• Unused monthly subscriptions

• Credit card debt

It’s time to take notice, and take action to turn your fortunes around.

Not Investing

Every year your cash loses value due to inflation.

Inflation refers to when prices rise, meaning that you’re able to buy less each year, with the same money.

Sure, you can receive interest on your cash, but when interest rates are lower than the rate of inflation, your gains become obsolete.

So, with the exception of an emergency fund, you need to put your money to work, buy buying a diverse range of assets:

• Stocks

• ETFs

• Real Estate

It’s time to start making your money work for you.

Buying to Impress Others

We’re living in the social media age, and what I have called The Image Pandemic is something that so many people have become a victim of.

We work jobs we don’t like, to buy things we don’t want, to impress people we don’t like.

It’s a tough world to be a part of, but what’s tougher is when you’re spending all of your hard earned money on things to try to look rich and successful.

In truth, these items:

• Designer clothes.

• Brand new car.

• Overpriced jewellery.

…are the exact things stopping you from building real wealth.

Remember, real wealth is what people can’t see, and it certainly isn’t defined by what’s parked on the driveway.

Once you master the discipline of delayed gratification, and buying to benefit your future self, rather than your image today, you become unstoppable.

Living Paycheck to Paycheck

The most important tool for anyone to be able to build wealth for their future is what we call disposable income.

Disposable income = Income — Expenses.

The difference between how much you make, and how much you spend, can have a direct impact on your ability to achieve financial freedom.

Someone who earns $8,000, but spends it all, will not be able to build wealth.

Someone who earns $5,000, spends $4,000, and invests $1,000 will have a much greater chance, despite earning less.

So, always remember, it’s not how much you make, it’s what you do with it that matters.

Increase your disposable income by creating a budget, so you can:

1. Find out what you’re spending your money on.

2. Find ways of reducing your expenses, to raise your level of disposable income.

Paying for Unused Subscriptions

Over 50% of American adults are believed to be paying for at least 1 monthly subscription that they’re no longer using.

Sure, it might only be a few dollars a month, but give it a few years and this will build up, especially when it’s money that you can start to compound and build for your future.

It’s always smart to make a habit of regularly checking your monthly subscriptions, to make sure that you’re only paying for what you use.

Otherwise, you’re just giving away money to businesses for no reason…

Nobody wants to be doing that, do they?

Not Having A Budget

Like I just mentioned above, a budget can be super helpful in increasing your disposable income, and giving you a better picture of how your finances look.

But, they aren’t the most glamorous thing to be doing, or the most fun.

So, as a result, people don’t bother with them.

Due to the “boring” nature of a budget, it really separates the fakers from those who actually want to improve their financial situation.

If you’re serious about making changes, a good place to start would be to create a budget.

Not Having A Long Term Plan

A lot of people fail to make progress for the simple reason that they don’t have an overall goal to achieve.

It sounds obvious, but there has to be a goal, or overall objective to be working towards, that will help you stay motivated to your journey of financial self improvement.

So, it might only take a minute or two, but come up with one big goal that you wish to achieve. It could be:

• To be debt free.

• To have a 6-figure investment portfolio.

• To earn $1,000 per month in passive income.

Use a flagship goal to constantly remind ourself of why you’re doing what you’re doing.

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