There’s an interesting maxim about how long
wealth actually stays with a person and their descendants. The saying is three
generations, tops: one to make it, one to spend it, and the third to blow it.
Of course, there are exceptions to this rule, but have you ever sat down and
seriously thought about wealth and what it means to you? Or do you figure,
“What the heck, I’ve always been broke, my forefathers were broke; it’s
generational” – it’s just a rite of passage of sorts. If you feel that wealth
is out of your reach, you aren’t alone. According to some experts, there are
millions of ‘clueless potential millionaires’ who could be at the top of the
wealth ladder if they only reined in a few bad habits. However, you may be a
skeptic, and rightly so. Being wealthy means different things to different
people. But according to the experts, there are financial mistakes many people make
that keep them away from their possible wealth.
What is Wealth Anyway?
Most people do not equate wealth with a mansion
or a big yacht. In fact, a scanty 7% of people surveyed associate wealth with
material possessions like cars, houses and boats. Rather, to many, being rich
means having just enough to not worry about the next payday – that’s according
to 33% of those questioned. An additional 26% define being wealthy, or rich, as
having more than enough money to quit their jobs. Still, few people place an
actual dollar amount on what it means to be wealthy. Only 17% felt that being
rich means having at least $1 million or more, and 11% stated a six-figure
yearly income would make them feel rich. Yet most people who are rich don’t
even consider themselves rich. Maybe it’s because being ‘rich’ or ‘wealthy’ has
very little to do with material possessions, and more to do with how people
feel about themselves. Nonetheless, according to financial experts you will
never be rich if you are bogged down by anything on the following list:
Ten Reasons Why Someone Will Never Be Rich
1. Overspending
If you have a ferocious appetite for spending
beyond your means, you’re not alone. According to a survey, of the 52% of
people who habitually overspend, many balance the shortfall by taking from
their savings, and 22% rely on credit cards. Blowing all your money each month
is not a realistic pathway to wealth. Start tracking where your money goes each
month, check where you can cut back, and create a ‘realistic’ budget that
allows you to pay your bills and invest in a retirement account or an emergency
fund.
2. Not Saving Enough
Welcome to the club! The personal savings
percentage in the US is a measly 4.9% of disposable income. Saving should
become a priority if you want to accumulate wealth. Start with an emergency
fund. Once your emergency fund is substantial, you can redirect small amounts
toward other goals like purchasing a home or paying for college.
3. You Have Too Much Debt
Certain debts are a precursor to financial
success, like purchasing real estate or starting a business; however, a
high-interest credit card balance is not. Pay off credit cards with the highest
rates first.
4. You Don’t Have a Plan
Without a definite, clearly defined plan,
becoming rich will seem like an unbelievable dream. This alone will solidify
your excuses for overspending and not saving. As the saying goes, “Those who
fail to plan, plan to fail.” Putting together a financial plan may seem
tedious, but it doesn’t have to be, and you can get used to it.
5. You Don’t Have an Emergency Fund
Experts say you need at least six months of
income saved in case of an emergency. Life is tricky, and not having some type
of safety net can turn a comfortable situation into a disaster.
6. You Started Late
Time is slipping by. Just like starting an
exercise routine, the most difficult part about saving is getting started. Even
if you have debt, a small income, or many expenses, you can save something,
even if it’s only a small amount.
7. You Complain Rather Than Commit
“I don’t earn enough money”; “Life is too
expensive”; “It’s hopeless, I’ll never get out of debt.” Have you uttered any
of these statements before, or perhaps all of them? Old habits die hard;
however, as long as you do nothing to change, nothing will change. Stop
complaining and making excuses. Instead, take responsibility for your
non-productive habits and concentrate on how to change them – and then do it!
8. You Live for Today, and Forget
About Tomorrow
It’s no fun getting serious and thinking about
retirement and all that stuff. Nonetheless, eventually it has to be done. The
problem is that impulsive and unregulated spending leads to debt… period! Do
yourself a big favor: Get rid of the ‘buy now, worry later’ attitude, and
switch to a ‘save now, get rich later’ way of thinking.
9. Putting All Your Eggs in One Basket
You might get lucky by wagering all your money on
one type of investment. Just like you might get lucky winning the lottery. But
that’s not a strategy to live by, or for getting rich. Putting all your money
in one place is not advised because it puts you at too much risk. Your
investment portfolio should include multiple investments with varied levels of
risk and ROI potential and liquidity.
10. You Just Don’t Get It!
You may be one of those people who believe that
somehow something will come along and save you, so why bother with saving or
trying to get out of debt? Maybe you will get lucky and land a fantastic job,
receive a big pay raise, inherit money, hit the lottery, or whatever! But
‘whatever’ won’t cut it if you really want to become rich. Yes, life is
uncertain. No one knows what will, or will not, actually happen; therefore, why
not focus on what you can control today? Get it together now and save yourself,
in case someone or something else won’t.
One thing you can be sure of: You are already
rich. Think about it. If someone came to you and offered you a million dollars
for your arm, would you give it up? Why not, you have two; you can surely spare
one of them! Of course the answer would be no! Being rich is more than physical
ownership; it’s a state of happiness and well-being, while wishing the same for
others. So while you are working on getting rich materially, remember to be
happy along the way!
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