1. Borrowing to start Business
Never borrow money that accrues interest to start a business. That is to say, never borrow money to start a business expecting that the business will generate income to pay back the borrowed money plus the interest. Businesses have their own short comings so when it comes to starting a business Patience is key, yet when you borrow money, this money accumulates interest over time. You don’t need this especially when the business is new and has not yet realized returns.
2. Spending promised cash
Never spend money you haven’t received. Don’t even promise someone money based on a promise you have from someone else. If someone tells you: “Geofrey, come to my office tomorrow at 9am and pick 30K”don’t go out to buy items on credit based on this promise, with the hope that you will pay off your creditor when the promised money comes; it may not come as promised and this will leave you in trouble with your creditors. Ask your self what if this person encounters a bigger problem remember this is just a promise!! Its not a guarantee.
3. Spending Aimlessly
If you want to save, whenever you receive money, don’t start spending hoping that you’ll save what remains. Normally what remains is zero because as long as money to spend is available, the numerous things you can spend it on are also available. And things to spend on even incite their ‘relatives, inlaws and friends’ so that you spend even more than you had planned. When money to spend is not available, we naturally find a way of doing without it. That’s why I’ve learnt to save with an INVESTMENT CLUB. Once I send money there I assume I no longer have it. Before you spend any money, put your savings aside then spend what is left after saving.
4. Asking Ideas on how to make money
When you get an opportunity to meet a very wealthy person, never ask for money. Ask for ideas on how to make money. They may even choose to give you money on their own after seeing that your ideas are great, but let getting money from them never be your objective. Share your ideas but DON’T expose all.
5. Sow the seed
Keeping your seed instead of planting it. Many people stop at saving. It’s very, very difficult to save and have all you need to maintain your lifestyle especially in the due course of your retirement. When you save, your savings are seed; plant it. When you just keep the seed (saving money) some seeds begin to die (eaten by inflation and the like, dollar fluctuation and the sort). That’s why I recommend that you read about the different types of investment vehicles you can use to grow your savings. I am not necessarily talking about putting the money in a business, because you can easily lose money in business. I am talking about putting it in an investment.
6. Lending money for prestige
Money lent is Friendship lost. Never lend someone money you are not willing to loose. By the time you lend someone money, be contented in your heart that should the person fail to pay, you will not die. You should not even lose that person’s friendship if they fail to repay the money you lent them. If you feel the person might fail to pay you and this will not affect your relationship with them, then lend them money. If their failure to pay would make you hate this person’s entire clan, please advise the person to go to the bank.
7. Guarantee mishap
Never append your signature to guarantee someone on a financial matter if you are not willing or able to pay the money on their behalf. Do I have to explain that one? No, it’s self-explanatory.
8. Never move around with bulk cash
Avoid keeping money you don’t intend to use in the short-term within easy reach. For instance, don’t walk with 100K in your pocket when all you plan to do in a day costs 20K. Like I mentioned in Money Mistake 3, there are always expenses available to gobble any money that is within reach, so if you don’t want to lose it, put it away in a safe place.
9. Reckless money keeping
Avoid keeping money in inappropriate places e.g. in socks, under the pillow, in a pit, in the sitting room, in the bra, in a travel bag that you will place somewhere in a taxi … impulse buying is a devil that will keep you busy!
10. Self control
Spending money on an item that you can do without (at least for the time being). These days when I pick money from my pocket or wallet, before paying for something I ask myself: What would happen if I didn’t buy this? If I find I can live with the consequences of not having that thing, I smile and walk away.
11. Spending extravagantly
Paying an amount for something that’s not the minimum you can get that same value for. In other words, if you are along Luwum Street and you pay 5K for a Handkerchief that you can get at 1K in downtown yet the distance is not alarming, that’s a money mistake except for those who have achieved financial freedom.
12. Spending more than what you Earn
Consistently spending all you earn or more than you earn. It’s like having a drum where you have an inlet that’s smaller than the outlet. It will never get full. And should the inlet ever reduce significantly the drum will run dry. If you do it the other way round and the inlet is bigger, it will get full and even overflow. Hence, we have to always ensure we are widening the inlet while narrowing the outlet – all the time. Your side hustle comes in handy!
13. Look beyond your nose
Thinking about short-term only and forgetting about long-term or thinking about the long-term and forgetting about the short-term. For instance, Lydia was told that there’s money in land. She saved money over a long period of time and bought 30 acres of land. Now she has the land but she is always broke. She is always complaining. She’s disgruntled and she doesn’t seem to see herself earning from the land in the near future. Now, let’s ask ourselves: Having 30 acres of land and no money to feed your family or take a child to hospital, is that wealth or poverty? I think Lydia only looked at long-term needs and forgot that she has short-term needs that require money. What of those who find they are one paycheck away from salary? Are they thinking about the long-term needs?
Let’s take stock of our finances. How many mistakes are you guilty of? Do you now feel better-equipped to do better with these tips? Good luck, savers! Share this knowledge with your friends because it will not benefit you if you are selfish with it.