Stubborn behaviours can hurt our goals to become rich

PHOTO: Stubborn behaviours can hurt our goals to become rich

Many years ago I helped someone solve a bad credit problem that saved her a few thousand ringgit.

My advice was that she should place her 'newfound' savings into a safe portfolio to build up her emergency funds.

16 money mistakes you are making

  • We've all learned from a young age that saving is good for you. Failing to save means you have nothing to fall back on when you need it. It also means you are more likely to borrow and increase your debt when you need funds for certain things like having a wedding, furthering your education and more.
  • Your budget is the key to achieving all your goals. Just as we have limited time, most of us have limited means. So, how you choose to spend your money can either help you take that dream trip to South Africa or can keep Cape Town in your dreams. Without a budget, you also run the risk of falling into debt, a huge hindrance to achieving goals.
  • Setting aside a bit of money every month for emergencies could save you big time when you least expect it. You never know what could happen, and having funds to turn to could help you get through bad times in life.
  • If you do not plan your expenditure, you could end up spending a lot of money on things you do not need. Just because something is on sale, does not mean you should buy it.
    Always think about how much you need the item. If you don't already have it, think carefully if you will actually use it if you did own it.
  • You could be paying a lot of unnecessary fees if you don't check your bills before paying. For example, credit card insurance that you never signed up for, or telco service subscriptions you did not know about.
  • Very few people think about retirement and when they realise it, it is too late to start saving. Plan and save for retirement from your first paycheck to ensure a comfortable retirement.
  • Choosing wrong insurance plans will affect how much you can receive when you are in need. Think carefully about the policies you are offered and read up about which insurance plans work out best for your lifestyle.
  • Credit card companies have a range of incentives which encourage people to spend more. Spending is encouraged with 'reward points', lucky draw, privilege discounts and more. Beware of these marketing gimmicks and stop yourself from spending on things you might not actually be able to afford.
  • Many people save a lot of money by doing their homework before shopping - finding out which merchant has the best price for the product they want. You can also take this further, by always trying your luck to negotiate for better prices on big item purchases. You never know when you might get a good deal.
  • It takes a certain kind of bravery for people to dabble in investments. Many experts have warned that making investment decisions based on your emotions and fear can jeopardise your ability to reap rewards.
    "You can't let the outside environment dictate every single change you make," Mr Scott Thoma, investment strategist for Edward Jones told Fox Business.
  • Many consumers are guilty of this - signing away their lives to credit companies in exchange for products they want but do not need. While credit cards make it easy to spend, paying for debts is not as easy, especially with interest rates. Try not to reach your credit card limit every month and if you can, avoid using it at all.
  • Spending money on entertainment and leisure is good, but make sure that you can also afford to spend on classes and opportunities which are good for your career. Taking up a Chinese for business class, for example, could be very useful if you plan on expanding your business networks overseas.
  • If you need to take on a loan for your house, car, education or other purposes, be sure to do your research and obtain for a loan which is best for you. Don't fall for marketing gimmicks. Instead, think about interest rates and the realistic capability you have to repay the debts incurred. If you don't need to take out a loan, maybe you should not even apply for one at all.
  • Spending $5 a day on coffee adds up to a lot of money over a month. You could save a considerable amount if you cut down or stop spending so much on things you do not need to have every single day.
  • You can afford to have a meal without buying a drink when dining out. Bring your own water or wait till after the meal to drink some. This means healthier meals for you too!
  • Many people are used to having lunch out of the office because they are too lazy to prepare a meal beforehand. If you have time to spare, prepare a sandwich the night before so that you don't have to spend a single cent at lunch. Dining out could gradually damage your wallet in the long run.

To my dismay, I found out later that year that she had used all her savings to buy another luxury car and her debts started to pile up again!

This is an excellent example of financial stubbornness when the habits in our lives are beyond control.

Such behaviours are financially fatal and if change does not happen, the only way is downhill.

Besides behaviours, there are also stubborn perceptions which can rob us of our wealth building goals.

* Investments are always bad for me.

Investors who do not understand how investments work and have lost money think that investments are not for them.

Losing money does not make the investment "bad" but such perceptions can keep your money from growing.

Create portfolios which are aligned to your life's goals.Avoid being sold merely on products.

* Insurance is only out to cheat me.

Some may have listened to a bad sales talk, resulting in being under insured and exposed to financial losses due to unforeseen events.

Make sure that you understand what insurance you are buying. Normally, a good insurance would provide you with the highest coverage at the lowest premiums.

* I am more clever than the market and hence I can beat it.

No one can ever predict the market movements even with the most sophisticated tools!

Even if they can, why would they want to share with you the trade secret?

Time, strategy and a purpose should be your focus in building wealth.

* I am too young to plan for retirement.

Retirement isn't about retiring due to age but retiring from the work you don't enjoy.

You can 'retire' even if you are in your thirties or forties.

If you are not planning early, there is really no time to accumulate when you are 'forced' to retire in your later years.

Being financially stubborn also means being financially arrogant.

There is no point being arrogant and yet ending up poor.