Do You Make These Mistakes Building Wealth?

As a child, I thought about building wealth like fantasy.  I had this idea that the individuals building wealth were the ones that drove luxury cars, lived in big houses, and traveled abroad for vacations.

As I grew up and started to study money and how it’s created, I realized I was wrong. Because what I thought were signs of wealth are symbols of wealth.

There is a difference between building wealth and consuming wealth. When you create wealth, you get richer. You are likely to grow poorer when you are a spender or consumer.

The secret to building wealth is investing and saving more than you spend. Wealthy individuals have the habit of saving and investing more of their income than the rest of the population.

The late Dr. Robert Stanley, the bestselling author of the Millionaire next door, observed that real millionaires lived frugal lives. Stanley also observed that millionaires spent their money differently than others.

Dr. Stanley’s book is not popular with most working adults. But if you are serious about becoming a millionaire, you should read the millionaire mind.

Let me make it clear that building wealth unrelated to looking rich

To build wealth, you must believe in prudence and self-restraint with money.

A US Census Bureau statistic shows that 95 % of working adults will either become penniless or rely on social security or relatives to care for them at retirement.

When you look at the US Census Bureau Statistics, you’ll think anyone reading them will prefer to choose thrift to a life of hardship at retirement. Right?

Wrong! Because you and I make the same mistakes about building wealth, I thought I should write about them.

I have made tons of money in one breath and then lost all the money I made in the twinkling of an eye.

I am wiser about building wealth and much more careful about my money

Here are the mistakes I have made about building wealth you should avoid.

Increasing your spending as soon as your income increases

I have fallen into this trap of spending more than I earn as soon as I get  a pay raise

Oh yes, why not? When your income increases from $2000 to $8000 monthly, won’t you feel like a star?

I am sure you will.

What I used to say to myself was, “be good to yourself”… “Life’s too short enjoy it while it last,” and before you know it, my credit card is maxed. And I am back to the same financial level as before I had my pay raise.

How do you overcome this urge to splurge whenever you get a pay raise?

The first thing I would suggest has a wealth-building plan. Why? Because when you have a plan about how you intend to invest your money, it’s easier to save any extra income you earn

Another way to avoid spending your excess earnings is to have an investing account. You must save that money in your investing account as soon as you get any bonus. Never spend money from your investing account unless you want to invest in your wealth-building plan.

If you already have a mutual fund or retirement account, you can also increase your funds with your pay rise.

Sometimes instead of saving money or investing…I just use the extra income I earn to pay the debt. If you think about it, credit card debt loans are obstacles to building wealth. The earlier you can get rid of debt, the higher your chances of building wealth.

If you desire to build wealth…you must avoid spending more than you earn. You must learn the habit of saving more than you earn