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How Even Millionaires Can Lose Everything – 10 Money-sucking Mistakes To Avoid – Elite Financial Habits

How Even Millionaires Can Lose Everything – 10 Money-sucking Mistakes To Avoid

​There is a viral video on Facebook by an entrepreneur sharing his story of how he was still broke despite earning a high-income salary.

Only when he realised what his mistakes ​were and changed his mindset and habits, did his financial health start to improve.

Watch the video here:

Make These Mistakes and You’ll Go Broke

A lack of financial resources is a significant cause of stress. There are many factors that contribute to a small bank account. The most basic cause is outspending your income.

No one can spend more than they make indefinitely. Sooner or later, the money runs out.

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Several mistakes contribute to financial challenges. Luckily, a few changes in habits can get your finances back in the black.

Do you make any of these errors?

#1 Neglect to pay yourself first

One cause of being broke is the failure to save consistently.

Many make the mistake of paying their expenses first with the intention of saving whatever is left over. There’s never anything left over with this strategy.

Pay yourself first and then worry about your bills.

And "paying yourself" does not mean buying things for yourself for your own indulgence and desires. It means setting money aside for your own financial wellbeing and goals, e.g. for savings or investments.​

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#2 No emergency fund

Without an emergency fund, your finances can take a serious tumble when the unexpected happens. You’ll be forced to use credit cards, dip into your retirement accounts, or skip paying some of your bills in order to pay for the surprise expense. All are serious setbacks to your finances.​

We all know that shit happens. Not being prepared is being ignorant.​

#3 ​Fail to consider the long-term ramification of your choices

People that overspend are often focused on their short-term pleasure.

We live in a society that is overly fixated on instant gratification. We want everything to be fast and good.

But the truth of the matter is that certain things that can't be rushed. When you plant a seed into the ground, you need to take care of the sapling for years before you get to enjoy the fruits from the tree.​

Likewise, many of our current decisions have profound long-term effects. We need to consistently handle our finances with care in order to reap the rewards later. ​

Make financial decisions with a long-term focus and you’ll find your wealth growing year by year.​

#4 Lack the necessary knowledge

Math, science, and English might be required in high school, but a personal finance class is rarely required. Unless your parents were financially responsible and took the time to share their wisdom, you’re on your own.​

Managing your personal finances is one of the most important aspects ​of your life besides taking care of your health & relationships.

Buy a few books or research online and begin to educate yourself.​

Make a commitment today to dedicate yourself to learning more about personal finance.​

#5 Avoid using a budget

As you can see in the video above, even millionaires can go broke without a budget.

Sit down and create a reasonable budget that allows you to save at least 10% of your net pay.

​Trust me, this is one of the best decisions I have ever made in my life (besides marrying my wife 😉 ).

#6 Spend money on “wants” instead of needs

We’d all like a sports car or a 70” TV, but these aren’t responsible purchases for most of us. Try spending your money on a stock, bond, or mutual fund instead.

Most "assets" are really just consumables and lose money quickly.​

As much as possible, limit your spending to needs rather than wants.

#7 You’re stuck

If you’re in a challenging financial situation, it’s easy to feel hopeless and stuck. Taking action becomes difficult.

It is important to remember that ​there are positive case studies out there of people who hit rock bottom and still managed to turn their lives around. There is no magic involved.

All it takes is to follow a proven & well-documented framework based on mathematics and understanding the psychology behind accumulating wealth.​

Getting yourself out of a financial hole can take time, but it’s doable. And you owe it to yourself and your loved ones to find a way out.

Get help from an expert if you need to.

#8 Overspend on your housing and transportation

It’s easy to make the mistake of purchasing a property as much as your finances will allow. The same can go for a new car.

It is important to keep your expenses under control.

Remember, don't overindulge.

Secret to wealth: Spend more on needs, less on wants and be wise enough to tell the difference.

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#9 Excessive use of credit

Using debt to purchase a home or pay for college can be a reasonable use of debt.

Most other uses are toxic to your finances. You ultimately have to pay for an item or service, plus interest, when you use debt to make the purchase.

Dealing with debt is like running against the wind. It makes everything harder.

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#10 Spend more than you make

This is the core reason for a lack of wealth.

It can be difficult for some to understand but you can never run out of money if you spend less than you make.

Unfortunately, our society and capitalism encourages unnecessary expenditures. Have the discipline to spend less that you earn.

If you don't trust your discipline, then don't get tempted in the first place. ​Avoid window shopping, avoid looking at marketing catalogues. 

Be aware of your weaknesses and learn to manoeuvre around them.

Sadly, being broke is common

The only way to avoid being broke is to save regularly and spend less than you earn.

Even if it is very difficult for you to adjust, begin today to save at least 1% of your paycheck. Resolve not to use your credit cards. Keep increasing the amount you save each month and look to the future.

And you will be well on your way to a life of financial abundance.

About the Author

Tim Wayne is the chief writer at Elite Financial Habits. He understands that the rich didn't grow their wealth using magic; it is simply an intelligent combination of mathematics, psychology and economics.

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