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1. They haven't figured out the amount of income they actually need each week to do better than just pay their bills. They don't have a budget set up.
The appropriate definition of BUDGET is: the calculation of the amount of money necessary for an organization to function and reach its goals. If you are happy with just being able to pay your bills, and you never pay yourself first into some type of savings plan, you'll stay poor while you make your vendors rich. Every supplier that you pay is in business to make profits. You should run your business to make a profit. Your income target must include a profit or the enterprise will go broke and fail.
2. They don't work out ways to earn more money than they need, and then be willing to do whatever it takes to execute the plan.
By incorrectly estimating the amount of money necessary to exceed breaking even, they typically set their income target too low and lose money by living on credit instead of going into action to raise their income. Anyone can find different ways to increase their income; it is more often the 'willingness to do whatever it takes' that seems to be the problem.
3. They habitually spend more money than they make.
Using your income to buy the 'appearance' of having wealth is a deadly activity. I refer to this type of spender a Gratification Groupie. It can catch up with you quickly and over a short time can drown you in debt. This situation causes constant stress about money and brings on lots of sleepless nights. Money does not buy happiness. But, doing something productive and worthwhile and being appreciated for it will make you feel like a million bucks.
4. They never figure out what they will need in the future and then set aside a bit of cash each week in order to pay cash for the purchase later.
Buying things with a credit card because you are short on cash is committing your future production to the credit card company. You are then in economic slavery to the credit company. The right method to buy things, especially high dollar items, is to set aside a small amount each week till you have enough cash to buy the item, and then go out and negotiate a big cash discount. The guy with the CASH IS KING!
5. They buy services and products based on WANT rather than on NEED.
Buying decisions must be based on how your purchase of the product or service will assist you to produce more income for you. Honestly, do you want the latest cell phone that offers email retrieval and text messaging because your friends have one, or do you need it to increase your work productivity because you are out of the office making more money?
6. They never put money into a long-term savings plan so they have money for use later in life.
Are you counting on the younger workers' future production to supply you with Social Security income when you stop working? Boy, that is a huge gamble! Even though the government says the annual cost of living is rising 3 - 3.5% a year, the truth is that it is going up 8 - 12% a year. You have to make that much more income just to stay even. Why does our government report that it is only 3 - 3.5%? Unfortunately, it's because the government has to raise Social Security payments each year by the percentage they quote. Our Social Security system is already bankrupt and those living on Social Security alone are going in the same direction.
7. They never build up multiple sources of income. If one source disappears they are in financial trouble.
The expression 'don't put all your eggs into one basket' is true today, especially when it comes to income sources. Research profitable products or services you can add, or business ventures you can participate in that are ethical, and have a really good opportunity to producing a residual income.
8. They get stressed out about the low interest their bank pays on savings accounts while they are being murdered with much higher interest rates by carrying balances on their credit cards.
If you have high credit card debt, you are better off using excess cash to pay down the debt and get out from under the high interest payments rather than attempting to earn interest from the bank. As you reduce your debt, it is wise to keep sufficient cash on hand to cover a few months of living expenses. Once the debt is gone, or close to it, then begin investing any excess cash where you can get real growth.
9. They get stressed out about 'the economy' in general.
I'm surprised that most people actually worry more about 'the economy' than about their household or business failing financially. They worry about what the media is reporting about 'the economy' when that is something they can't control, while never looking at how they can affect the economy of their own household or business, which is what they CAN control. An increase in unemployment is no reason to worry. The creation of new jobs by small business far outweighed the loss of jobs in big corporations, according to the latest ADP report. A failing bank is no reason to panic. Banks receive funding for bailouts from the FDIC and other investors. No one is waiting in the wings to bail out your failing business. That is entirely up to you. So keep promoting your business, put aside some money, and sleep well at night while the dire news about 'the economy' rages around you.
10. They expect to survive financially without taking full responsibility for controlling their financial future.
Money problems have a simple solution. Cut expenses, increase your income, and correctly manage what income you do get. It's not only about how much money you make, it's what you do with it that determines your financial condition.
Proper money management is something educational institutions don't teach. People receive bad advice and false information about how to handle money. So then they make silly mistakes, get into worse trouble, attempt to solve the problem by using credit, wind up in more trouble, and then go searching for debt relief.
Fortunately, there is an inexpensive, proven, money management software system that can reverse the money management mistakes a person has made in the past, and keeps them from making those same mistakes in the future. It is an old-school system that your great grandparents used before the days of credit cards. Very wealthy people understand and use this system today.
