3 Money Mistakes You Must Fix to Get Rich

I get a lot of questions about how to get rich, and I
always give the same answer.
Don’t spend too much. Mostly save. Always invest.
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Seems simple enough, right? Yet so many people do the
exact opposite -- invest poorly, spend way too much,
save almost nothing, and remain willfully ignorant about
their finances.
Why? Because they don’t understand their relationship to
money.
The first step in changing money habits is taking a cold
hard look at your financial input and output. Here’s what
you need to do: boil your money matters down to one
simple number by adding up all your earnings and
subtracting all your expenditures over three months. I
call this your 90-day number.
Once you write that 90-day number down you’ll be faced
with one of two truths.
1. Your number is positive. Congratulations,
you’re one of the few people taking in more
money than you spend!
2. Your number is in the negatives, and like the
majority of men and women, you spend more
than you make.
The good news is that no matter what your 90-day
number teaches you about your relationship with money,
there’s always room to improve. I’m going to help you do
exactly that by pointing out 3 money mistakes everybody
makes at some point in their lives, and teaching you how
to fix them.
1. You’re drowning in credit debt.
The Fix: READ THE FINE PRINT
Spending too much is a disease, and credit card debt is
a cancer. The first time you get a credit card bill and
don’t pay off the full balance, you’ve let the first
financial cancer cell into your life.
Next time you get a credit card bill in the mail, put your
glasses on and take a good, hard look at the fine print.
Related: Canadians Can Give to Charity and Get Cash
(LinkedIn)
Credit card companies are required by law to tell you
how many years it will take you to pay off your balance
if you pay the minimum each month. In most instances,
this number is a monstrous thing to behold.
With typical compound interest rates averaging around
16%, this black hole of debt keeps growing, and growing,
and growing.
Once you take a look at the fine print, you MUST start
dedicating every spare penny you have to paying off
your credit. If you want to get rich, you need to eliminate
your debt first.
2. Spending makes you happy
The Fix: GET A HANDLE ON EMOTIONAL SPENDING
Most men and women who spend too much do so
because it feels good, temporarily. But as I always say,
mixing money with emotions is a toxic combination.
Don’t go shopping to change your mood. It might make
you feel better in the short term, but I promise: the long-
term fulfillment of saving and growing your money far
outweighs the temporary satisfaction of retail therapy.
Recognize when you’re about to spend with your
emotions, and go for a walk, cook, or read instead. Do
anything; just don’t head for the mall!
3. Frugality isn’t fun
The Fix: CREATE A “FUN MONEY” FUND
Many people who commit themselves 100% to
eliminating debt and saving money find that a certain
joylessness creeps in after a while. The same thing
happens to dieters who deprive themselves of all their
favorite foods for months, and then cave to late-night
binges.
That’s not a way to live, and that’s not what I advocate.
Austerity, yes; deprivation, no.
Related: How Ice Cream, Girls, and Gum Made Me an
Entrepreneur (LinkedIn)
The key is to include spending on fun things in your
budget. Set aside a manageable percentage every week
in a fund that will let you splurge with cash. Go out for
lunch, get your hair done, or use your fun money to go
on a vacation—do whatever you want, as long as you
pay for it outright. This way you can enjoy your splurges
without feeling guilty!
Read more about finding financial freedom in the Cold
Hard Truth On Men, Women, and Money.