🌻If You’re Making this Common Mistake With Your Money, Forget About Becoming Rich

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Wealth is not only about having a good budget and investing.

Throughout my financial life, I have seen how money gurus say that the key to success is having a budget, not spending more than necessary, and saving (or investing) as much as possible.

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But while this advice may be good for starting and learning to manage your money better, it is not the only thing you need to have wealth.

Read also: 4 personal finance mistakes that keep you from building wealth (Highly recommended)

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In fact, going only with this line can make you mediocre if you only focus on it.

For example, imagine you earn $25,000 per year and follow the common advice that says you need to invest 20% of it ($6250) and live a frugal life to wealth.

If you only focus on that, the most you can save all your life (assuming you won’t have emergencies) would be $187,000 or $800,000 with interest compounding in 30 years.

The problem with “have a budget and save” is that it limits your potential to a single path and makes you think you don’t have to do anything else because one day, you can be close to a million.

But waiting 30 years while still in the same place as always, and not being able to achieve other goals because you have to live a frugal life is the easiest path, but slower and more uncertain (because you will never know what will happen to your life while you are just saving).

When you already know how to manage the money you have, you must learn how to create passive income and leverage your income.

Why a budget and investing is only the first step, but not the only one to have wealth.

Last year, I had two jobs and a side hustle. I had to quit one of the jobs because it was consuming too much time, and I wanted to focus my time on other personal things.

When I quit that job, I had two options:

Reorder my budget to my current income.
Increase the money I was earning.
As I had an already expensive life (and I didn’t want to sacrifice some things about my current life), I decided to grow my current income to cover those expenses.

For the next eight months, I spend my time learning new skills, searching for new clients, and moving my savings to better financial products. And that motivation helped me finally become a freelancer and grow professionally.

The result was that I doubled my income without needing another job and grew in many aspects of my life.

So I not only know how to manage the money I already have, but I know what to do to produce more in the future, and I work for it to happen.

If I had stayed with the idea that my relationship with money is about knowing how to manage what I produced, I would never have decided that it was necessary to increase my current earnings.

I would only have to “eliminate unnecessary expenses and reduce my budget” because this is what most people think is the path.

But it was the fact of having an expensive life and wanting to continue living it that made me grow.

What should you do when you already know how to manage your money.

Many people see a fancy car as a waste of money and an absurd goal. However, I see it as the possibility to make you think big.

When your only goal is to maintain a Honda Civic a retire, your mind puts you to work for about $700 monthly because it knows that with that amount, you could achieve your goal eventually.

You don’t need extra effort because you know that goal can be reached with the bare minimum.

But when you have a vision of a $100,000 car, you think about making those $100,000 and a little more to keep it. You think about good ideas for businesses, more profitable investment opportunities, and a better job.

As you see, the final goal is not to have an expensive car; it is to have the mentality and power to reach it, even if, in the end, you decide it is not a good investment.

When you already know how to manage your money, the next path is to know how to increase it and make plans to make it happen.

If your current plan is to retire in 20 years by saving $1000 a month, this year, put in your mind to increase your income so you can save $1500 a month and retire in 16 years.

If your mentality had been not to pay for streaming services because it was not healthy for your budget, put in your mind to make $10 or $20 more a month so you could afford that Netflix subscription.

Put in your mind that you can achieve more because you will work for it by saving more, searching for a new client, charging more for a new product or service, having more outputs in your content creation side hustle, or obtaining a better job.

Don’t settle for “just saving $500 a month; I can be a millionaire in 300 years” because it limits your potential.

In 2020, I knew I wanted to have a new car and a house for my mom. Instead of adjusting my budget and retirement plan for that, I started writing. This helped me to learn and grow a six figures business and not give up on my dreams because I have to “save.”

Ambitious goals make you creative; never settle for the simplicity of compound interest.

Most of the businesses people create have been because they have not been satisfied with what they currently earn, and they know that investing is only a way to keep your money, not to make it.

So instead of thinking that you can retire in 20 years with what you currently do and live a sedentary life, think about how you can reduce those years by earning $500 more monthly.

Read also: 10 ways to radically improve your finances in 2023 ( check this out)

Final thoughts

Your relationship with money is not only about making a budget, not overspending, and saving; that’s just the beginning.

To get rich, you must learn to grow what you are currently doing and set goals to earn more over time.

The problem with the advice to “live below your means, save some of your money and create a budget” is that it limits your potential to what you currently have and doesn’t let you see beyond what you can do now.

Being able to have a specific lifestyle motivated me to increase my income. Others achieve it to have the car or the house of their dreams or because they know that waiting 30 years to be close to a number is slow and mediocre.

Don’t let simple advice determine your path. You can be more and achieve more; a 30-year plan is just the easy and comfortable way to do it.

Contributed by Desiree Peralta

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