Why is it that some people become millionaires seemingly overnight while others seem to be stuck living paycheck to paycheck – or worse, stuck in a vicious debt cycle?
Growing up in a poor or average household may mean that your chances of meeting some really successful and wealthy people to guide and mentor you may be slim but, if you know where you want to be and you don’t let anything stand in your way – you can certainly become a very rich man. If you have the opportunity to speak to some of the wealthiest people in the world they will all tell you the same thing – it all starts with the right mindset.
The truth is that we all have the potential to become incredibly rich; we’ve seen many examples of average men who have overcome education and background barriers that to most, would seem unsurmountable. Even IQ doesn’t have the ability to hold anyone back; as has been recorded in many studies however, there are some things that do have the potential to hold you down; from being a mindless consumer to accepting debt as a normal part of life – we’re going to look at some of the things that keep the majority of people straddling the broke line. The objective is to alter your mindset and push you further towards whatever financial goals you may have.
Even though this article is targeted towards those who have intentions of becoming exceptionally wealthy, avoiding these common habits, ideas and financial pitfalls will help you make sure your finances are always kept in check – whether you want to become a millionaire or just live comfortably.
Table of Contents
- You Buy Useless Crap
- You Rely on One Income Stream
- You’re Wasting Time
- You Have NO Goals
- You’re Working a Dead-end Job
- You’re Drowning in Debt
- You’re Focused on Saving Not Earning
- You Make Excuses & Dwell on the Past
- You Entertain Bad Relationships
1. You Buy Useless Crap
This may seem like a no brainer but it’s the number #1 reason that most people are either always broke or straddling the broke line.
Using your money to buy things that you really don’t need is the main reason that you’re all out of cash one week into the month. If you’re currently spending 15% or more of your income on non-essentials that you could easily live without – you’re in the “poor man” frame of mind and need to snap out of it – fast.
You don’t need 20 pairs of pants or 10 pairs of oxfords to look decent – you simply need a handful of quality items. You also don’t need the latest iPhone, largest plasma and every PSP game known to man – you’re a big boy you can do without the flashy gadgets too. The only time you’re entitled to make extravagant purchases is when you’ve reached all your financial goals and are earning enough to cover all your heart’s desires and then some.
Your list of financial goals should include having an emergency fund, a retirement plan, and multiple income streams of which at least a handful should be in the form of passive income.
2. You Rely on One Income Stream
You’re a nine-to-fiver.
You’re earning a pretty good income at the moment and are focused on your next big promotion – and nothing else. You may be thinking you’re destined to prosper but relying solely on one income stream will in no way make you a rich man just as working for someone else won’t either.
If we take a look at the most successful people in the world – they all have one thing in common – they took the plunge and ventured out on their own and it paid off – big time.
If you truly want financial freedom and success you have to work on setting up and maintaining multiple sources of income. This doesn’t mean that you have to dump your day job and rush off into the unknown but, it does mean that you have to take a serious look at investing your hard earned cash into something that has a high potential for growth and good returns that can be maintained over a long period of time.
What people don’t realize is that they could easily lose their jobs and find themselves actively searching for employment for longer than they ever thought possible. Having nothing left to fall back, you could end up in a devastating financial position that even your emergency fund won’t be able to cover.
Having a part-time job, side-business, online income stream, property or stock portfolio will ensure that you have something to fall back on if times get tough and will also ensure that you’re earning potential isn’t limited to the number of working hours in a day.
3. You’re Wasting Time
The only thing that you can never get back is time.
If you go to work and barely get anything done then get home and spend the night watching TV – you’re never going to progress in any aspect of your life. If you spend more time tapping away on your iPhone than you do working on your studies, relationships and goals than you’re going to end up moving backwards instead of forwards.
It may be difficult to go from couch potato to superman – but if you set your mind to it and work at it, you’ll soon be wondering what the hell you were doing with your time. You won’t find a single self-made millionaire that can be accused of being a couch potato because it’s simply impossible to make money if you’re not actively working. To make money you simply have to be willing to work hard while everyone else lazes around.
Rich people are masters of managing time and their resources – start with the former and you’ll already be half-way there. People that make decide to lose weight and get into shape are motivated to keep going not because hard work feels good but because of their results – and successful people keep going because they know the taste of success is better than the bitterness of stagnation. In addition, there is no motivator that is as powerful as success and using every waking hour in a productive way will yield some serious results and this will motivate you to keep at it and work harder.
Procrastination is another deadly time-waster that can eat away at your goals and dreams like a plague of locusts – never say you’ll do something tomorrow that you have the time and capability to do right now.
4. You Have NO Goals
The only people that get anywhere in life are those who know where they want to go.
Many people say that they want to be rich but they have no idea how they intend to make the kind of money that will earn them that title.
If you’re a business owner and want to see your profits double within a year – you’re going to have to have a plan on how exactly you’re going to achieve those figures. From introducing new products or services to developing an innovative marketing strategy – you have to know the how of it all to be able to make those big dreams a reality.
If you’re the kind of person that simply “goes with the flow” and hasn’t the faintest idea of how to make your dreams a reality – you’ll end up running around in circles – permanently. The key is to break down the most complex problems and biggest dreams into small, realistic and achievable goals that you can work on daily.
Setting up a profitable online business isn’t something that can be done overnight – it takes a great deal of small and concentrated efforts to put it all together and it is these small details that you need to focus on figuring out and bringing to life before you’ll be able to stand back and admire the glorious results of all your hard work.
5. You’re Working a Dead-end Job
Similar to those who rely solely on one income stream – those working dead-end jobs are those that are in need of change the most.
If you’re working a minimum-wage job and can barely make ends meet – without some drastic changes you’ll end up going in the only direction possible – down. Those that have good positions and earning decent salaries but have no future prospects within their companies or plans to venture out on their own will reach a point where they’ve maximized their earning potential. This means that apart from the yearly increase that can help curb inflation you’ll never earn enough to get you from average to wealthy or from comfortable to financially free. There is nothing as bad as taking a look at your current position and realizing that this is it.
If this is you’re reality than you need to look for another job that can offer you a better position, more money and better hours and if you’re working a minimum wage job you need to focus on getting a job that will offer money based on performance rather than hours. If nothing else you’re job should offer you unique experience that will help you achieve your future goals and land the job and income level that your want.
If its education that’s standing in your way than this should be your number one priority however, it’s critical to constantly be out there learning new things and educating yourself, no matter at which stage of your career and life you’re at.
6. You’re Drowning in Debt
Debt isn’t always bad.
Many people have taken out loans that have enabled them to start-up a business or make an important investment however, when you’re taking on debt mindlessly and letting it eat up the majority of your income you’re setting yourself up for failure.
Student loans, mortgages and car loans are the major forms of debt that are usually necessary and can even help you achieve your goals but, even these have to be managed exceptionally well to ensure you actually benefit at the end of the day. Making minimum payments on your mortgage or, worse yet, missing payments may send you into the dreaded debt spiral. It’s important to put a plan into place to pay off your mortgage and other debt off as fast as possible. High interest debt such as that found with credit card and payday loans is the most dangerous form of debt and should be avoided at all costs.
If you’re struggling to make end meet taking out loans will never do more than worsen your situation – which is why having an emergency fund is absolutely critical to ensuring you can keep your head above water when things don’t go as planned. Ridding yourself of debt will enable you to free up a large portion of your income that you can then allocate to savings and investments.
7. You’re Focused on Saving Not Earning
If you’re more worried about hanging on to each and every penny than you are about developing yourself, your career and setting up various income streams than you’re like a dead fish in the water.
One of the biggest differences between rich and average people is that rich people know that they can always make more money – while the average seem desperate to hang on to the little they have. Put more energy into maximizing your earning potential and you’ll actually reach the point where you have enough money to put away in a savings account that can earn you some decent interest – otherwise you’re just playing with change. Putting all your money into a savings account isn’t ever going to make you rich but investing in your education and using your money to develop additional income streams certainly can.
Coupons and 50% off sales are only for those who have no intention of moving up financially – you’re not going to become a millionaire by eating noodles and catching a carpool to work but, if that’s not what you have in mind, putting something away is always better than spending every cent mindlessly.
8. You Make Excuses & Dwell on the Past
You’re the only person that’s responsible for what happens in your life – end of story.
If you’re the kind of guy that always has someone or something else to blame for your lack of success and progress than you’re not going to make it further than your drive way.
We all have people and events in our lives that hurt us and have the potential to drag us down but the winners are those who simply refuse to let this happen. At some point you’re going to have to get over whatever happened in your past and move on – you could dwell in your sorrow forever but, then again, why would you want to? You always hear successful people saying that the difference between them and everyone else is that they had the guts to try, fail and then go in for another round.
There is nothing as powerful as sheer persistence and courage – go in with the right mindset and if you fail – get right back up and try even harder.
9. You Entertain Bad Relationships
It’s been statistically proven that married men earn more than single men.
But getting divorced, as a man – well you can pretty much figure it out… you’ll be half the man you once were and your ex will be worth more than she’s ever been worth.
If you plan on getting married any time soon you should seriously consider getting a prenuptial agreement – after all, if she loves you she won’t care that you’re not willing to lose everything you’ve worked so hard for if the relationship doesn’t go as planned. There are many women out there who want nothing more than to laze around spending your money while literally sucking the life out of you. If your partner or spouse isn’t contributing to your household or is a careless spender – then it’s time for you to put your foot down and cut the fuel line. The problem isn’t only the blood-sucking spouse but the husband or partner who enables them by accepting this type of behavior.
This doesn’t only apply to your significant other but to friends and any family members who have made it a habit to pass on their bills and problems onto you. If you really care about them than you have to learn how to say no – you can’t provide for them forever and they need to learn how to take care of themselves.