With all of the chaos that we are seeing bubble up around us, both in our nation and overseas, it can feel like everything is in flux.
Please, if you’ve established for yourself a hedge against financial turmoil, let’s not have you ruin it.
Last week, I sent you a Note which addressed these issues. It was a bit controversial, but I’m also glad to say that it was very well received.
You see, in days like we’re facing, it might be a common temptation for my wealthy clients and friends to succumb to wrong thinking — the kind of thinking which they successfully avoided in order to attain the wealth they have.
So, I had thought it appropriate to put together a small series on “right thinking” when it comes to your wealth, and this is the second part (of two).
I’d love your thoughts again, by the way.
5 MORE Bad Money Habits And How To Overcome Them (Part 2 of 2)
“Putting off an easy thing makes it hard. Putting off a hard thing makes it impossible.” – Charles E Wilson
As I mentioned last week, through the course of our work with many successful Woodlands clients, I’ve made an unintentional, but close, study of how money “works” and just what it is that propels certain individuals and families into great quantities of wealth (and what also brings them out).
I hate to see those with wealth squander it, simply because they fall prey to the rampant fear.
Watch out for it in your own heart, in that of your children and spouse, and avoid these common behaviors of the poor:
6) Using credit habitually for “lifestyle” purchases: Delayed gratification isn’t something that they’ve heard of, and if they want something, they just put it on credit. After all, it’s at a 0% interest rate for the first 3 months! One purchase leads to another, and before they know it they’ve got thousands in credit card debt. Debt loads in the wealthy can look different, but the principles remain the same. Avoid leverage and keep your powder dry. Your lifestyle isn’t worth expensive cashflow.
7) Always paying more than you have to: Often people who are broke have gotten there because they don’t know how to shop for a deal, negotiate or ask for a discount. You can get a discount on just about anything from electronics to health care. Never pay more than you have to.
Why is it that the wealthy take perverse pride in paying full retail? It goes before the fall, as they say, so don’t become penny-wise/pound-foolish. Neither should you avoid effective negotiation in multiple categories.
8) Falling prey to lifestyle inflation and “keeping up with the Joneses”: This is a biggie for the wealthy. Even people with higher incomes have problems with staying ahead in their budget because they fall prey to lifestyle inflation. Instead of banking and saving raises, they raise their standard of living — buying a bigger, better house, a new car, and a new wardrobe. They feel like they have to keep up appearances with everyone in their neighborhood.
Take a good hard look at what motivates your purchasing, and clean out the dustbunnies of comparison lest they fill your brain with poverty-thinking.
9) Relying on others to fix your problems: We’ve probably all known people who are always going to their parents, family or friends to bail them out. They create a pile of debt, and then rely on the kindness of others to get them out of their bind.
10) Forfeiting future gains for fun today: These people often have a hard time visualizing how saving and hard work will pay off down the road. Instead, they live for the fun and pleasures of today. They don’t realize how saving for tomorrow can improve their quality of life today.
Don’t sacrifice your retirement on the altar of present-ease.
Obviously, I’d like to help you move past these behaviors if any apply. You may not carry every one of these traits, but just one or two can get you into hot water.
If you feel that you’re slipping into any of these traps, please do let us know. We’re here to help as your family’s Personal Financial Guide.
Aurelia E Weems, CPA