Managing your finances is a life skill that, unfortunately, many of us have yet to master. As soon as you increase your income, you find your expenses increasing too, right? That’s one common mistake most people make, according to finance expert Lynette Khalfani-Cox.
There are many more financial mistakes we find ourselves making either intentionally or unintentionally, and these, the financial expert says, are what separate us from those who are really good at handling money.
For starters, these individuals are not slaves to what Lynette calls the consumer culture, which translates to living beyond your means.
To put it into context, she says that you’ll find a person knee-deep in debt driving a flashy car or rocking an expensive designer handbag. In short, they tend to be materialistic and choose consumerism over their financial health.
A Financial Sage
A wise spender, on the other hand, lives way below their means. For this, she uses Warren Buffett as an example, but also clearly states that you don’t have to be stinking rich to be considered a financial sage.
Back to Warren, the man still lives in the first house he bought, way before he rose to become one of the world’s wealthiest men.
In fact, the home is worth a mere 0.001% of his almost $80 billion current net worth. If it were you, you’d want a fancier home, right? And that’s where you go wrong.
All the same, these so-called financial sages also spend big on some items, if we’re being honest. The difference, Lynette explains, is that their spending is almost always for the long term.
If they are to buy that designer handbag, it’s because they know that they won’t have to replace it for a few years. For others, chasing the brand is more important than long-term thinking.
Given the choice, what would you choose – and African safari or a pricey Rolex watch? Going by Lynette’s advice, taking the safari should be your choice.
As she says, responsible spenders choose experiences over materialistic things. Thankfully, a recent survey suggests that millennials are catching up to this trend, leading the expert to the conclusion that they’ve certainly got a good thing going.
Planning is Important
Do you have a budget or you just spend your cash till there’s nothing left? Thinking about it, when’s the last time you replenished your savings account, if you have one, at all? Careful spenders, Lynette says, are very good at planning. They plan for what they currently have, while also having their future in mind.
This way, they get to distribute what they have into several categories, including current expenditure, savings, and investments. Have you ever made an investment in your life? It’s high time you did.
The worst thing that a person could ever do is being in denial about their shortcomings. If you’re not that good with your money, why should you shy away from seeking the services of a financial planner? How about a manager?
Careful spenders have no issue investing in financial help. This is because they know that in truth, this is just but a stepping stone to more wealth.
Those not on this wavelength view hiring financial help as an unnecessary expense, choosing to be their own managers, accountants, advisors, and the like. More often than not, they regret this decision.