A big part of succeeding with personal finances is not making stupid money mistakes over and over.
In this week’s video I break down 8 stupid things I see people do on a regular basis when it comes to making money, plus what you should do instead.
If you’re interested in learning more about making money, saving money and investing money – feel free to subscribe – the videos are mostly not terrible.
Not a financial advisor and for entertainment purposes only.
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If you don’t have money or you’re not quite where you want to be at financially, listening to people that don’t have that much money either is a horrendous guy. Good day there, Ray Corcoran here. In this week’s video, we’re going to be talking about eight common mistakes people make when they’re trying to grow their net worth and improve their personal finances. And as always, if you like the video, give it a like. If you’re interested in learning more about making more money, investing, and saving money, please consider subscribing. And yeah, with that said, let’s get into the video.
So the first one is limiting beliefs. So a lot of what happens with our actions when it comes to personal finance begins with what we think about in our heads. A lot of people make this mistake. You need to be really conscious about how you’re languaging and how you speak about personal finances because this is usually a bit of a hint into what’s going on inside your head. And when I hear it, it gives me a bit of a clue in terms of how you’re approaching your finances and probably the types of actions that you’re going to take. So if you say you’re a spender, your actions will reinforce that, which will then reinforce your results and it becomes like a bit of a cycle over time.
So you need to be really, really conscious about how you’re speaking about it. If you say you’re a saver, you probably become a saver and then you’ll get some results and that will reinforce that behaviour. Start to be way more conscious about how you speak about like try to avoid saying things like I’m so bad with money because it creates a negative loop in my opinion. I’m sure there’s some studies behind it. But just to be really conscious about your languaging and your limiting beliefs because this can really, really affect your results when it comes to growing your wealth.
Number two is a bit of a personal pet peeve of mine, it’s listening to people that are also broke. So if you don’t have money or you’re not quite where you want to be at financially, listening to people that don’t have that much money either is a horrendous idea. Now, logically everybody understands this, but what you’ll find, even in the personal finance space, you see so many pages that have people that realistically don’t have an above average amount of money for their age and they’re giving out personal finance advice.
And I’m sure some people won’t like this, but I don’t have a problem with people sharing their journey and their story. I think that’s great and I think that I definitely encourage that. But there are some people that are taking a lot of their advice from people that they might be doing just average or whatever, and it doesn’t really make sense. If they were listening to their own advice and their own advice was so effective, then they would be themselves doing above average in terms of their personal finances. But if they’re not, then obviously behind the scenes, they’re probably not doing what they’re telling people to do. So just be super conscious about who you’re following and who you’re getting advice from and maybe just get a few different sources of advice. And try to make sure that these people are living what they’re teaching because you might end up following someone down the wrong path or having the wrong focus with your finances because these people don’t even have it sorted themselves.
So number three is a big mistake I see people making, is they’re so obsessed with the next app and there’s all these little apps and spreadsheets and all this sort of stuff. Now, those things can be useful, but some people are so obsessed trying to find the app or they’re trying to find the right budgeting journal or some stupid thing. And realistically, you don’t need any of that stuff. Often I find it’s a bit of a crutch that once I get this app, then I’ll be able to make progress in this area. Making a lot of money is quite a simple thing. It’s not necessarily easy, but it can be easy. But it’s not something that you need to over-complicate, I think way too many people over-complicate it. I feel like a lot of people in the personal finance space create complicated courses to justify their existence.
And realistically I got my net worth over a million dollars by knowing a handful of key things, working crazy hard, not spending any money, and trying to let no dollars go out the door and then just rinse and repeat, keep investing, keep investing. That is the crux of personal finance. And yes, there’s more nuance to it, but that’s at a high level what needs to happen. So don’t over-complicate it or try and think there’s some perfect app or let that… Just block out all that noise. That’s all micro stuff and I wouldn’t worry about that.
Number four is a bit of a funny one. They expect the ride to be fun or they get disappointed when the ride to build a lot of wealth doesn’t go the way they expect or it’s not super fun or they’re not making the progress they thought they would have made. Nobody said that this was going to be fun. And the journey is going to be very, very difficult for a lot of people and it’s going to take ages, it does speed up as you go.
I think that’s something that a lot of people forget is I think that the first 100 grand they make is going to be the same as making a 900 grand to a million for example, it’s very, very different. I think about the first 100 grand that I made, it was like the slowest thing ever. But then in a very short period of time, these days I can add $100,000 to my net worth. But early on, it took forever. I was like, “It is going to take me forever to get to a million bucks if it takes this long to make 100 grand.” Just keep that in mind. I’m not saying it’s going to be miserable the whole time, but just don’t expect it to be fun. There’s no guarantee that that’s supposed to be the easiest smoothest ride ever.
Number five is one that I see a lot of people doing. Some people may disagree with this, but it’s people that have little to no experience trying to pick individual stocks. Sure, you might be able to get lucky and pick a winner and everything is great. Also in the recent stock market, lots of stocks have gone up quite a lot. Now, the problem with that is for me, I think that’s essentially gambling. And if you made some money fantastic, good job. But just be honest with yourself, if you have a low level of skill in this area… I don’t consider myself to be an individual stock picking genius. And to make my first million dollars, I didn’t have to be a super genius about stocks. I think you have to have some sort of strengths, whether it’s good at making money or you’re good at saving money. But realistically, I think a lot of people think that they’re doing all this analysis on companies and stuff.
And if you enjoy that, fantastic, great. But I think a lot of people try and pick individual stocks. And if you’re building the foundations of your personal finances, personally, I don’t think you should be having too much risk early on. So you might have low returns, but you also have low risk. I’d rather build a strong, safe foundation and then build on top of that as your skill and appetite for risk may increase. Figure out whether that’s a good stock or how is the market, how is that industry, that sector, they don’t know how to rate company financials, there’s always certain things. I’ve done videos on ETFs, which have been quite popular, check out some of those on my channel where it explains how you can make 6%, 7%, 8%, 9%, 10% a year without really being a stock-picking genius.
And there’s still risk, of course, but there’s a lot less risk, you’re a bit more diversified. It might seem a bit lame to some people or not as exciting, but for me it early on, I didn’t want to jeopardise my starting capital too much. If I could make a few percent, it was doing better than I could get at the bank in a savings account and I was able to compound that money. And eventually it does start to compound quite a lot as time goes on. So just think about that. If you’re trying to pick individual stocks, you’re playing with fire. I think early on when you don’t have too much money, I think that’s very, very risky. You want to preserve your capital as much as possible. A little bit of risk, and then start to build up and build up.
And number 16 is one of the bigger ones. People care more about looking rich than actually being rich. If you’ve ever read like stuff like Millionaire Next Door, there’s a lot of studies and stuff to show that there’s a lot of people that on the surface may not look like they have a lot of money, but they actually do have quite a lot of money and have quite a substantial net worth. Now, I’m not personally suggesting that you have to live like a pauper and to deprive yourself of any of the luxuries. But a lot of people will try to show their status or keep up with friends or keep up with people at their work or whatever it is. But you’re just kicking the can down the road in terms of you reaching financial freedom. You’ll just never quite get there when you’re always… You’re slowing yourself down.
And that fancy watch that you may have bought or a fancy bag that you may have bought, a lot of people byproducts because of their emotions and they’re buying products to fill a gap or to make them feel happy, which is sad but it’s very, very common. They want the dopamine hit of buying something, they want the dopamine hit of people commenting on the stuff they bought or being jealous of them. And it’s very, very normal human emotions, but you’ve got to keep that in check. If you want to build up a lot of money, you’ve got to put your ego to the side a bit. You can buy nice things for sure, but I think you need to ask yourself, “Am I on that level yet truly?” And if you can’t really afford to buy a certain thing, just wait a bit and keep it low profile.
I remember for me many years ago, I wanted to buy a BMW 3 series and I was so set on buying it. It wasn’t a fancy model or anything like that, it was just the base model or whatever, but I thought I looked pretty cool in it and that would be a great option. The more money that I saved up, I was so keen on that. Realistically, I didn’t really want that level of car, I wanted the fancy one with all the sports stuff and the speed and all that sort of stuff. So I was settling too soon because I just want to have that status symbol that I just wanted to get to that level as early as possible, even if it meant that I was taking a massive loan to get it. Obviously, it’s quite stupid. But when you’re younger, you don’t care, you’re like, “I just want it and I’ll do even things that are detrimental to myself and my finances to get it.”
Thankfully I never ended up getting it and down the track, I got a much better car. And when I bought it, it was not a big deal at all in terms of finances. Whereas if I had bought that car and tried to flex a little bit too early, that would have been a big strain on my finances. And generally what I say to a lot of people is just keep it low key for a bit. I remember JJ saying once like, “Let your stuff bubble quietly in the background. And then one day it will just blow out of nowhere and everyone’s like, ‘Wow, what happened?'” So thinking about that for yourself, I think it’s a really good analogy for you to think about for your own personal finances. Just to keep it low profile. People have fancy products or whatever stuff, expensive hobbies that you may have or want to have. Keep a low profile for a bit, build up your finances, build up your finances, and just tune out of the social media whirlwind, where everyone’s buying stuff and doing fun stuff all the time.
Mistake number seven that people make is they half save. Now, this is probably more of an opinion thing, there’s nothing wrong with saving a little bit and living a little bit. For me, I don’t know, it just depends on your personality. For me, I actually found that half saving really was just like tearing off a band-aid really slowly. I found that I was actually far more effective when I just was really, really ruthless with my expenses and just lived lame for a bit and just got it over with almost. And now it can take one year, two years, three, multiple years to build up your finances.
But for me, the way I personally approached it, and this might not be right for you, but I think a lot of people could get a lot further, a lot quicker if they just increased the amount of pain that they were going through, self-induced, laid low for a little bit, and went really, really hard at the problem for a shorter period of time earlier as early as possible in their life. Then could ease up later and enjoy things. So it’s up to you, depends on your personal circumstances. But for me, I find that I’d rather have that short-term pain and then have the rest of my life to enjoy the finances and the freedom and all that sort of stuff.
The eighth mistake I see people make when it comes to their personal finances is they forget the principles. Regardless of all the different apps and all the different stocks that you buy and all the different ways you could use to make money or whatever it is, if you never forget the principles, you will definitely eventually get rich. The speed at which you get rich is going to be up to you, in terms of how much you sacrifice and how much you earn. But at the end of the day, personal finance was and always will be make as much money as you can, cut your expenses, invest early and often, and just rinse and repeat. So if you focus on those things, cutting your expenses doesn’t really take that long to be honest. And then from then you just need to be ruthless about letting money go out the door. Then focus as much as possible on building your income. And then take that excess income, put it into investments.
It almost doesn’t matter what you put it into to an extent. I’m going to be really careful about how I word that because some people will just go YOLO on something stupid. Take that money, invest it in something safe. There’s lots of ETFs that quite consistently will get you several percent in returns every year. And that will be like that forever or at least for a long time. And you’ll work out very fine. You can put that into a compound interest calculator, put in some sample numbers, even if you’re only making 6%, 7%. if you can invest as much as you can, those numbers will work out very, very well in your favour. And you’ll very likely become a multimillionaire and live very, very comfy.
So there are eight mistakes that I see people making with their personal finances, see which ones apply to you. Question for you is really, what adjustments can you make? If there’s any of that that really stuck out to you as mistakes that you were making, have a think about what can you do about it, what are the alternatives, and how can you shift your thinking so you can get better results. If there’s any mistakes that I missed, please let me know and let me know in the comments. And other than that, I’ll see you on the next video. Cheers.