Posted on 4 September '15 by , under General News.
Even high earners can make very stupid (and avoidable) money mistakes.
Use the below examples as a way to look objectively at your money behaviour and how it might be limiting your wealth creation.
Not having a budget
Some people think nothing of spending $1500 on a weekend away, or $800 on a new outfit. But even if you earn $400,000 a year, spending a substantial amount of money each month on purchases and experiences adds up. Not preparing and sticking to a budget is a common mistake among high earners, as many believe that a budget isn’t necessary, given their high level of income. Regardless of how much you earn, individuals need budgets to know where their money goes and what needs to be set aside to achieve their goals.
Peer pressure isn’t just experienced by teenagers. Don’t be the partner who drowns in non-deductible debt, but takes an overseas holiday once a year or owns the latest model car just because that’s what other partners have and do in your businesses.
Sunk cost fallacy
Avoid being the kind of investor who invests in a project regardless of potential returns. It is quite common for an individual to want to hang on to an investment that is doing badly because they feel both financially and emotionally invested, resulting in them being unwilling to sell.