Financial Misconceptions That Destroy Your Wealth Potential

There is a universal truth in the world of finances: Everyone has the potential to maximize their wealth – and similarly to lose it all as well.

Admittedly, while it is fair to say that those who are born with the proverbial silver spoon in the mouth might have an easier job getting to the money, it doesn’t mean that they are strategically equipped to make the most of their earnings and grow their income. Your wealth potential is connected to the mindset and money habits you develop in life.

The ability to generate wealth is not connected to the financial situation you were born in, but, instead has everything to do with the way you think about money. Someone who comes from a modest background and understands how finance works can enjoy a broader wealth potential than someone who might have more in their bank account, but fails to grasp the complexity of financial strategy. You can train yourself to grow your potential. Focus on erasing these costly misconceptions from your economic mindset:

Save What Is Left

Of course, everybody knows that savings are indispensable in modern life. However, there is more than one way to organize your saving strategy. Saving needs to be a planned activity in your budget. Planning ahead means that you can treat your saving funds like other expenses, alongside your utility bills and grocery shopping. Why does it matter? Because saving should never be an afterthought but a scheduled activity.

Setting up an automatic payment towards your saving account, for instance, can ensure you build the necessary capital for emergency costs. What this means is that you can secure a regular amount of money every month, which reduces the risk of taking on debt to tackle unexpected situations.

Action Steps To Consider:
  • Create a budget, even if that budget is simply on notebook paper.
  • Separate your expenses between fixed and variable, and take a hard look at your variable spending.
  • Take steps to cut your variable expenses each month and put the amount you save into a separate savings account.
  • Seem overwhelming? EarnUp can get you started on automatically paying your loans smarter, faster and with less money out of your pocket.

A growing number of people have subscriptions to stream content. Netflix and HBO GO are two popular sites. These two sites have become particularly attractive, because they now produce original content. Are you paying for more than one of these sites? If so, can you cut back to one? When you’re going to watch content, check out your subscription sites first. Redbox: Assuming that the movie you want isn’t on one of your subscription sites, you might check out Redbox next. Redbox offers new movies for just a dollar or two. On-Demand: Your last option should be on-demand through your cable or satellite provider. That’s because On-Demand movies are typically $5 and higher. Redbox is cheaper – and if you’re already paying for Netflix, this should be your last option.

Good or Bad? Funding a Project With Debt

The idea of taking on a loan when your financial situation is not optimal can be daunting. You need to think of the long-term consequences of a loan.

Typically new debt is not a good idea unless it helps you get out of your existing debt faster.

New Beginnings

Unlocking your wealth potential is about looking past your financial situation to spend and save smartly. Always plan your strategy ahead.