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8 Money Mistakes To Avoid On Your Way To Being Wealthy

There is a difference between being rich and having wealth.

Grant Cardone

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David-Beckham

Here are eight common money mistakes you must avoid to create wealth

panning-for-gold

Panning for wealth

Wealth is the abundance of something in such surplus that no conditions can destroy it. Making a lot of money is one thing, getting rich another.

Creating wealth, well, that’s what very few people ever learn. You have heard the expression ‘get rich quick’, but you will never hear ‘get wealthy quick’.

Ever hear the saying, ‘money never sleeps’? The wealthy take this literally and believe that money must work around the clock to grow. The wealthy respect and pay attention to their money knowing that nothing multiplies without attention. They also know money wants to be loved and acknowledged.

Sound crazy? Show me someone that doesn’t pay attention to their money or is disrespectful of it and I will show you someone lacking money. The wealthy also avoid mistakes that big income earners and the rich make.

Related: 5 Habits Of The Wealthy That Help Them Get Rich

Seeking comfort, not freedom

Seeking comfort, not freedom

Seeking comfort, not freedom

Comfort is the enemy of abundance and the most dangerous element of finances. The entire middle class is built on seeking comfort.

The wealthy seek freedom and so much abundance that money is no longer dependent on their efforts.

More is the mantra, abundance is the affirmation, comfort isn’t on their menu and freedom is the focus.

Diversification

diversification

diversification

You can never get truly wealthy by diversifying your investments. The world’s stock exchanges have done a great job of selling the public on this idea of diversifying because it benefits the exchanges.

American businessman, Mark Cuban, says ‘Diversification is for idiots’. Andrew Carnegie said ‘put all your eggs in one basket and then watch that basket.’

If you want to create real wealth learn everything you can about a space and go all in.

Depending on one income flow

one income flow

one income flow

No matter how big your income is, never depend on one flow. I knew an executive who was earning R4 000 000 a year, the top one percent of all incomes.

Suddenly the industry she worked in came to halt and her one income flow was shut down. This has happened to many people, destroying trillions of rand of ‘pretended’ wealth.

To create wealth, you must make investments that will create dependable streams of income flows, independent of your main source of income.

I use rental income from apartments and partnerships in other companies to throw off passive flows of income. I continue to pay attention to each of these flows to make them stronger.

This is not diversification – it’s fortification of wealth.

Related: 9 Success Habits of Wealthy People That Cost Nothing

Comparing to others

comparing-yourself-to-others

Seventy-six percent of the work-force lives from salary to salary. Comparing your finances to others will ensure you never create wealth.

People often compare their situation to some starving nation in a remote part of the world to justify being ‘better off.’

Another person’s finances, good or bad, will not pay your bills, won’t fund your retirement and will not provide you peace of mind. Don’t compare your finances to someone else’s.

Investing in trends

investment-trends

Trend investment advice

Avoid investing in the latest and greatest technologies that can be displaced by new technological developments.

Warren Buffett invests in electricity, railroads, banks, insurance, soft drinks, food companies and candy.

Don’t get on the roller coaster. Take the longer, slower ride that guarantees arrival.

Trusting without proof

trusting-without-proof

Trusting without proof

The single biggest mistake of my financial life was naïvely trusting a group of people because I liked them and it felt right.

I neglected to get proof that they were actually as they presented. Instead I went with my feelings and was deceived. By the time I figured out something was wrong, I was out millions.

Disregard your feelings when it comes to people and always look for solid evidence.

If you are so close to people that you are not willing to ask them to provide evidence, make it a policy not to do business with them.

Related: 8 Steps to Become Wealthy In Every Sense Of The Word

Saving to save

cash-register

Saving money

It is impossible to create real wealth just by saving money. If the banks only pays 0.25 percent, it will take you 40 years to grow your money 10 percent if rates were to stay where they are. More importantly, money that sits around idle always seems to find an emergency to fund.

Some financial experts suggest that you don’t carry cash or credit cards because when either is available – you’ll create a reason to use it.

To guarantee my wealth, since the age of 25, I moved surplus money into future investments accounts that I could not easily access, so that money was available for investments.

I finally had the knowledge and courage to do so. This kept me broke and having to hustle constantly.

Pretender spender

wealthy-woman

Sounds good doesn’t it? So what will it be for you: Middle class, rich or wealthy?

On the other end of the spectrum is the pretender spender. They try to impress others with how they spend money.

It’s not their money; it is always someone else’s. Sports cars, expensive clothes, designer bags, shoes, V.I.P. tables – the list is endless.

When the wealthy hit affluence and abundance, they start throwing money around on ridiculous things – cars, boats, planes, vacation homes. By then, it no longer matters that the things are poor investments.

The very wealthy may appear to be flaunting their money with extravagances, but in reality they are not. The money they are spending is miniscule compared to the abundance they’ve created.

You know money won’t make you happy and just getting by won’t either.

There is a price to be paid for whatever choice you make. Wealth provides you with options and the person that has options has freedom.

Next Video: How to Become a Millionaire by Age 30money-money-money

There is no shortage of money on this planet, only a shortage of people thinking big enough. Apply these 10 steps and they will make you rich. Click Here

Grant Cardone is an international sales expert, New York Times best-selling author, and radio show host of The Cardone Zone. He has founded three companies: Cardone Enterprises, Cardone Real Estate Holdings, and the Cardone Group. He has shared his sales and business expertise as a motivational speaker and author of five books: Sell to Survive; The Closers Survival Guide; If You're Not First, You're Last; The 10X Rule; and Sell or Be Sold.

How to Guides

Making Money Online: 10 South African Entrepreneurs Doing It

You don’t need an eight-to-five job or stacks of capital as the launch-pad to start a business and create your own source of income. Here are 10 entrepreneurs who’ve found some unconventional ways of making money online using common platforms.

Diana Albertyn

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How to Guides

Fintech And Small Business Success: 5 Tips For SA’s Fintech Start-ups

Let’s look at what the future holds and how small businesses can benefit.

Colin Timmis

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fintech-and-small-business

Around the world, the fintech revolution is disrupting our relationship with money, both in our personal and business lives. This global market is expected to be worth $10,499m by the end of 2018 – and digital payments account for much of this growth. This means it’s an exciting time for small businesses looking to get ahead. Whether they’re fintech developers, users or both, these businesses are putting new technologies to work and benefitting hugely.

South Africa’s small business community, like elsewhere, is embracing fintech with enthusiasm. To make the most of  this energy, new incubators and accelerators are setting up shop across the country. Cape Town, for example, hosted its first ‘Startupbootcamp’ which focused on creating scalable technology solutions for financial services and related industries. At Xero, we recently launched a virtual hackathon to enable South Africa’s technology entrepreneurs to compete with other forward-thinking developers on a global scale.

Against an energetic business landscape, fintech presents an attractive market for SA’s budding entrepreneurs. In today’s competitive business environment, new technologies are key to meeting your target audience’s needs and expectations.

So, how can entrepreneurs take advantage of what fintech promises? Let’s look at what the future holds and how small businesses can benefit.

Think smart, grow fast

The range of available fintech solutions and tools is vast. However, new technologies alone are not enough to get your business off the ground – and keep it there. Here are five tried and tested tips for small business owners to keep in mind at all times.

Related: Fintech: Fusing Finance And Technology

1. Have an idea

Entrepreneurs first need an idea, then a plan supported by realistic goals. Your idea has to be good: ask yourself what you’re going to sell, and why. Once inspiration has struck, subject your idea to some hard scrutiny. Chances are someone else is already doing something similar – which is fine if you can do it better.

2. Build a plan

Your business plan is your map. It will help you launch your idea with structure and thought, and guide your company’s progression. You don’t need to stick to your plan like glue: Flexibility is certainly a virtue. A new twist or turn – as long as it’s on the right track – could take the business forward faster.

3. Be flexible

Of course, if something isn’t working then don’t be afraid to abandon it and move on. Fear of failure often results in entrepreneurs throwing good money after bad. Know when to scrap an idea, take what you’ve learnt and focus on something new. Remember, there’s no point crying over sunk costs.

4. Stay alert

When it comes to new ideas, look at what’s old and needs refreshing. Keep a constant eye out for ways to disrupt the status quo and offer people a better way of getting what they need. Even if your business is running smoothly and doing well, if you don’t stay alert, you could lose out on some low-hanging fruit to a competitor.

5. Use technology

Startups are typically constrained by limited resources – namely time, money and labour. A solid plan will help allocate your resources effectively. Fintech solutions can provide a strong backbone that helps you enhance your capacity, manage your cash flow better and improve productivity.

Related: 6 Lessons The Founders Of iKhokha Used To Launch An African Fintech Start-up

The future of fintech in SA

South Africa is fertile ground for fintech. A lack of legacy infrastructure – particularly in outer lying areas – has created a large underbanked rural population hungry for financial services. What’s more, a growing urban middle class is demanding more sophisticated solutions to outdated forms of payment processing.

Fortunately, these demands are not falling on deaf ears. The local tech community is part of a dynamic development ecosystem that is working hard to innovate tools that provide greater financial access. With a clear gap in the market and an eager target audience, the future for fintech developers and users in SA is looking stronger than ever before.

Regardless of what your business offers, where it is based, it’s size or age, it’s time to join the fintech revolution. By embracing relevant solutions, your business will become more agile, efficient, responsive and ultimately, more successful.

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How to Guides

Loan Scams: How To Protect Yourself From Loan Scams

My thoughts are that only if there is a grassroots movement by people affected by these scams to get rid of these unscrupulous marketers, will there be any chance of change.

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loan-scam-business-advice

The current economic situation we’re experiencing in South Africa has created a strong appetite for credit. Often consumers need to borrow money out of desperation just to help them survive. It is here where scam artists and unscrupulous marketers prey on the public, signing them up for services they do not need, with monthly debit orders adding to their woes.

It’s a tactic that we’re seeing more of these days: A company advertises that they can help you secure a loan, even if you’re blacklisted. They charge you for this ‘service’ and at the same time sign you up for a bundle of monthly paid-for add-ons, hidden away in the Terms and Conditions (T&Cs).

They are doing this despite the fact that it is illegal to advertise loans to those who are blacklisted (according to the National Credit Act), and that a company cannot charge to facilitate a loan (according to National Credit Regulator [NCR]). To make matters worse, in 99% of cases, the applicant is turned down, and now has to continue paying for services that they were unaware of signing up for in the first place.

Related: The Definitive List Of South African Business Incubators For Start-Ups

This is criminal behaviour, but for some reason it does not get acted on by relevant authorities (such as the NCR) which should be protecting consumers. With an estimated one million South Africans being preyed upon like this annually, those who are tasked with watching over the consumer should not shake this responsibility. That’s not to say the marketing industry is blameless – far from it, but without a regulatory body, there’s very little to be done to act on these rogue companies. Even Google benefits from these loan scammers – just type in “bad credit loans” and see how many ads pop into the paid search results.

My advice would be for consumers to be vigilant in managing their financial affairs, especially when it comes to “too good to be believed” offers. Here are some pointers to help consumers protect themselves:

  • Never give your bank details to an unknown brand or marketing company that is not your own bank or insurance company.
  • ALWAYS read the Terms and Conditions before signing up for anything. Most of these scams work because the extras you sign up for are buried in the T&Cs, making them part of the contract.
  • Never agree to pay someone to find you a loan. The service provider is conducting an illegal act, since they cannot charge consumers for loan finding services according to the NCR.
  • As difficult as it can be, do not apply for loans if you are blacklisted as there is little chance you will qualify. These scams are run by people who feed off/take advantage of people’s desperation, so rather speak to your bank to get advice about your situation.
  • Sites such as Hellopeter are a great resource to check if companies are offering fraudulent services. It will only take a few minutes, but could save you years of problems.

As for what to do if you have fallen victim to these scams, complain in writing to the Credit Ombudsman (ombud@creditombud.org.za) as soon as possible. At this stage, we’ve lost faith in the NCR or the Consumer Protection Act stopping these types of scams. Rather get in touch with Carte Blanche, your local or national newspaper, and note it on Twitter and Facebook. My thoughts are that only if there is a grassroots movement by people affected by these scams to get rid of these unscrupulous marketers, will there be any chance of change.

Related: Seed Capital Funding For South African Start-Up Businesses

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