by STAN EDOM
Moving from
the rat race to the fast track is one of the biggest problems the middle-class
population in every part of the world faces. They dream of financial freedom
and talk about what they’d do if they “luckily became rich”, but still continue
to make the same money mistakes that keep them trapped in their financial
situations.
Kids these
days are too focused on the fastest way to make money, rather than the smartest
way to make money. They make mistakes trying to get rich overnight.
What money
mistakes are these? And how can a large part of the population stop making
them?
If you feel
you’re currently in this position and don’t know how to break out of this
group, here are 7 money mistakes the middle-class never stop making:
Buying Things They Want, Instead Of What They
Need:
The most successful
organisations in the world market their products around people’s wants, not
just their needs. They appeal to the masses’ fantasies and use their brilliant
campaigns to make them desire the need to settle their appealing wants before
their core needs.
The problem
with this is it does nothing but keep a large part of the masses in degrading
financial situations, while the owners of the businesses running these
campaigns continue to get wealthier.
When you
place you wants above your needs, you activate misplaced priorities, which
in-turn negatively affects your financial situation.
By spending
more money on what you don’t need over what you need, breaking out of the rat
race would be very difficult for you to achieve.
Piling Up Excess Debts:
The people
who borrow money the most are the middle class, and a large part of them
haven’t realised that yet. In underdeveloped countries where credit cards
aren’t rampant, people borrow so much from family and friends to settle their
immediate wants and needs, and as these debts pile up, they realise they have
little to nothing to save after repayments at the end of every month.
It gets even
worse in developed countries where credit cards are the norm. Too many people
swipe-away with their cards for almost everything they need. Thereby piling up
extraordinary debts that can only hardly get settled.
One money
mistake to avoid no matter what class you belong to in the society is to stray
far away from debts that are not taken towards making you more money. If
borrowing will only build up your liabilities, you should avoid it at all
costs.
Not Having A Retirement Plan:
A retirement
plan is what determines how well you’ll be taken care of in your later years.
It ensures you have all you need even if you have no other means of income, and
it guarantees that your basic concerns surrounding financial independence in
your later years are to a great extent, solved.
Most people
have no retirement plans. They look at it as a long-term process, and instead,
choose to live for the now, because after all, “You Only Live Once (YOLO)”.
When you
have the YOLO mentality, regrets will almost inevitably build up in your later
years when reality sets in and there’s no way for you to raise money.
Having a retirement
plan is planning for the future. And planning for the future, is one of the
first steps to make a move out of the rat race.
Having Little To No Savings:
Most people
have little to no savings. They spend everything on their immediate needs and
make little to no efforts to put out at least 10% of their monthly income in an
emergency fund or a form of savings.
When you
have no savings, you’d have no money to take advantage of any sudden
opportunities that come your way. Likewise, you’d also have no funds to take
care of any unexpected emergencies that also hit you.
A key money
mistake the middle class keep making is having little to no savings. And until
they can learn to put aside at least 10% of their monthly earnings, breaking
free from their financial situations would prove to be very difficult.
A recent
report from Frugaa revealed how over 30%
of the middle-class families around the world have no savings at all, with 69%
having savings of under $1,000, meaning most people have little to no savings.
They spend everything on their immediate needs and make little to no efforts to
put out at least 10% of their monthly income in an emergency fund or a form of
savings.
Depending Purely On Salaries:
A large part
of the population lives pay cheque to pay cheque. Their lives revolve around
their next salaries, and the only thing they aspire towards is to attain a
promotion at work, so they can earn an even higher salary.
They brag
about whose organisation pays better, complain about most of their bosses who
do nothing but frustrate them, and spend a large part of their time talking
about people they know are doing big things.
If you find
yourself in these circle, change your association as soon as possible. People
are infectious, and their way of life will affect yours. You need to be amongst
people who motivate you to act, who push you with their success, and who do
nothing but help each other grow.
Putting Their Children In Expensive
Schools:
Every parent
wants the best for their kids. But when they go as far as putting the family’s
finances in harm’s way because they want their kids to attend one of the most
expensive schools, they do nothing but threaten the family’s financial future.
The people
who make this mistake the most are those who earn a considerably fat salary.
They equate a huge monthly pay cheque to success, and so, ensure they step up
most of their expenditures, including the class of schools their children
attend.
Instead of
putting your kids in the most expensive schools, you can put them in really
good schools that charge a modest fee. A $4,000 a term school will never
guarantee your child would be better off in life than a child attending a $400
a term school. Afterall, some of the wealthiest people around the world today
didn’t even have any form of education.
Making Financial Decisions Solely
Based On How They Feel:
One of the
biggest mistakes people make in life is to make decisions based on how they
feel, and not based on what is practical. There’s always a time to follow your
guts, but when that time feels like every time, you’d always find yourself
ending up with mistakes.
Hope is not
a strategy, and making financial decisions based on emotional connections will
do you no good. Brands build emotional connections with their customers so they
can keep selling more products. The emotional appeals of their campaigns
confuse the prospects and drive them into making decisions they think they’re
completely in control of.
Experienced
marketers also know this, and so, design their sales pitches around getting a
sizeable number of people to act immediately.
When you
make financial decisions based on how you feel, you lose money. And when you
lose money, you push yourself deeper into the rat race. By realising your
emotions could be your biggest enemy in making financial decisions, you can
better understand how to control it, tame it, and shape it into what could
become your best bet in avoiding many money mistakes that the middle class
never stop making.
Source: startuptipsdaily.com
