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Financial Freedom - 8 Habits That Prevent You From Financial Success
If heavy smokers abandon their sick habit, then they have at least half a million euros in their account when they retire. Do not you think? Then read this post to the end and you will understand how little things, habits and wrong thought patterns affect your financial success and they will block your way. In the article "Financial Freedom - 8 Habits That Free You Faster" I have already described habits that will pave your way to success. Now it is time to clear some big stones from this path. Many people are so focused on getting rich that they regularly make simple mistakes and fail to notice them. In this post today I am describing the common habits, the mistakes that you shouldn't make.
Here we go
# 1 Who doesn't honor the cent ...
... is not worth financial freedom
I experience again and again that when thinking about great wealth, the smallest worker, the cent, is completely forgotten. Just as a long way begins with the first step, the first million begins with the first cent. You shouldn't be stingy now and live like that, but watch out for the many mini-savings options.
For example, there are people who don't care about the tire pressure of their car at all. For me this is the classic example with money left on the street. A checked and slightly increased pressure helps with fuel consumption and saves you money without you noticing it at first. If you lose the habit of not worrying about the air pressure, then you have already cleared a stone on the way to financial freedom. You can save around 80 - 90 euros a year, which is around 10,500 euros over a lifetime (40 years) with an interest rate of five percent.
Another way to save money is to pay attention to how expensive a cup of coffee is as a coffee drinker. It's very easy to grab coffee from the machine or enjoy one from the coffee pod. The convenient capsules are up to seven times more expensive than normal filter coffee. Especially with the goal of wanting to be financially free later, you should think about how expensive your coffee is. Buying a coffee at Starbucks and Co. every day can make you very “poor” for a long time.
And if you haven't done it yet, be sure to compare the amounts of your running costs. A lot can be saved, especially when it comes to electricity.
Here is a comparison calculator * that will help you not to pay too much.
Note: Don't leave the cents on the street. Get into the habit of always paying attention to the small savings potential. As the name Potential suggests, there is great power in it.
# 2 Let someone else manage your money
In order to become financially free, your money should multiply and not be used to pay other "financial experts" and fees. Because behind them there is usually “only” a salesperson for financial and monetary services, a typical example being your insurance agent. Especially when it comes to saving money for old age or major purchases, you will often lose a lot of money. In the case of Riester pensions and capital-forming life insurance policies, your monthly paid amounts are significantly reduced by the acquisition fees and running costs. Here are three interesting links on this topic:
Try to take care of your finances yourself as best you can! I like to repeat this point again and again, because I regularly get shown contracts to recalculate and find out that in some cases the money is better invested in a non-interest bearing savings account. Just imagine: You get financial advice, you pay regular contributions all your life and in the end you have less in the pot than you paid in.
Even with the banks, you often pay quite high fees for your deposits with savings plans. There are now intelligent products that diversify your monthly savings rates well, i.e. invest in funds, bonds and commodities, but these automatic processes cost fees that you can save.
Note: Try to take care of your hard-earned money yourself. Take an hour at least once a month to do an overview, keep a household book, and if there is any money left, invest it. I have put together a few options for you here.
# 3 Think of property as an asset
If someone thinks that a house they own is a fortune, then please click here and order and read the book Poor Dad Rich Dad *. Usually one's own home is viewed as wealth, although it does not make money, rather it still costs.
Things that are valuable and do not generate a cash flow in your favor are not a fortune. You will rarely be able to sell an expensive car above the purchase price. At most you have invested money in for many years to own a classic car.
Your property only becomes a fortune when it works. If you rent out your house or share your car for a fee, money will flow back into your pocket and an asset will be created. Maximilian from http://tesla-mieten-sachsen.de/ has implemented this principle very well into reality and created an asset with his Tesla. Since most of the time cars stand there waiting to be driven, his Tesla is regularly rented out and one day the purchase price will be down again.
# 4 Returns on assets are not determined
It is a habit of many investors not to focus on the return on their cash flow. Here, too, money is left lying on the street and the path to sufficient passive income is blocked. I would like to fix this to an example.
James Rock has bought a condominium which he is renting out. He paid a total of 65,000 euros for this and received a monthly rent of 450 euros. His income amounts to 5,400 euros per year, a proud sum. Since some maintenance (insulation, flooring, ...) will be necessary in the next few years, James sets aside 200 euros every month so that these costs can be borne later. That makes reserves of 2,400 euros a year. These must be deducted from the rental income, leaving 3,000 euros per year.
3,000 euros with an investment of 65,000 euros make a 4.62 percent return
That's pretty good, but some alternative investments outperform it. Here are three examples:
- When investing in real estate through Exporo, you always get between 4.5 and 6.0 percent return
- Investment in a dividend aristocrat: AT&T at 5.10 percent (08/13/2017)
- Investing in an ETF, for example the iShares (DE) I - STOXX Global Select Div. 100 returned 5.66 percent over the past 12 months
Another advantage of these 3 forms of investment is that they are 100 percent passive. Once the money is invested, there is no longer a need to shake hands.
Note: Get used to comparing the return on investments. Do not look at the absolute figures in euros (e.g. 5,400 euros rent) but rather the relative percentages (4.62 percent).
# 5 Ready-made food makes you sick and poor
Possibly an illogical point in the subject of habit and financial freedom, but a very important one that I want to make.
For many people it has become a habit to no longer actively prepare their meals to a large extent. Lunch is in the canteen or in the snack bar. The restaurant is often tempting in the evening and the snack in between can be found on the way. Based on point # 1 Huge sums of money accumulate here without even realizing it. It is of course very convenient to buy your meals, but also extremely expensive. This means that you can quickly collect 10-15 euros a day for food during working hours, and if you cook it yourself, you will be satisfied with 5 euros. This accumulates over 200 euros a month for ready-made food. In addition, a few visits to restaurants and 350 euros have been eaten. Extrapolated over 40 years and invested in Exporo, you have eaten 671,125 euros too much. (smile)
Of course, I don't want to keep you from not eating anywhere anymore, but keep an eye on it and a healthy mediocrity can amount to a quarter of a million euros in the course of your working life. That means 2,000 euros more monthly pension for ten years as part of a withdrawal plan.
Incidentally, self-prepared food is often much healthier, which means a longer financially free life. So it's doubly worth it.
Note: Question fast food and go out to eat. Enjoy this comfortable situation that your food is being prepared, more consciously.
# 6 Investing without informing
When it comes to buying a new television, I very often experience how it is turned into a science. Which model do I want and which features should it have? How big should it be and what can it cost? Where can I get the TV cheapest? These are just a few of the questions. It is researched, compared and learned what the new device can do. The decision-making process can therefore take a few days.
When it comes to investing money sensibly in order to increase it, then often much less energy is spent on research and on the topic. Dealing with your financial future for a week can mean the difference between Old-age poverty and a generous retirement period turn off.
Most people did not have a financial education in school and have to deal with it later. If you ask me which of my TOP 5 books are to get a good overview of the possibilities of investing and to acquire good basic knowledge, then be sure to take a look at these books:
Of course, you can also continue your education on the Internet, but I noticed that I “suck” most of my inspiration and high-quality bundled knowledge best from classic books.
Note: It is best to get used to 15 minutes of TV or fun videos on YouTube every day and use this time to further educate yourself financially.
# 7 You haven't invested any money
A habit or mistake of thinking of many people is to count on the money invested. It is recorded in the minds as a nest egg, sometimes also withdrawn in the event of financial bottlenecks. If, after years of saving and investing, you have 50,000 euros in stocks, then you don't have that 50,000 euros, not for a new car or a new kitchen. This money should grow and have children. I very often experience that a few years are well invested, yes before the return rocket really takes off, the money is withdrawn. The shares are sold.
The following fictional example.
James Rock owns 50,000 euros in stocks and ETFs, and saves 200 euros a month in an ETF savings plan. His portfolio generates annual dividends of 3.5 percent and the average price gain is 5 percent per year.
- Situation 1: He takes 30,000 euros to buy a new car
- Situation 2: He leaves his depot untouched
What do you think this behavior will cause after 25 years of investment?
- Situation 1: After this time he owns 351,230.74 euros
- Situation 2: Here his assets are 581,833.61 euros
From the withdrawn 30,000 euros, there is a difference of 230,602.87 euros. It's all about time 🙂 Do you now realize how important it is to let the money work (early) and, if possible, not to touch it for consumer goods? Even if this calculation was carried out without a tax consideration, you can see the huge difference.
Note: Let invested money and assets work in peace and do not disturb it with reckless consumption withdrawals.
# 8 Stand by your goals
The path to financial freedom is not an embarrassing one. You don't have to be ashamed of being economical and clever with your money. When you have a goal, don't hold back with it just because other people don't think like you.
In the beginning I often experienced that I preferred not to talk about my goals, mostly out of shame because I think differently. Someone who appreciates the minimalist way of life and lets the rest of his money work is simply looked at wrongly. I now have clear goals and at some point would like to have so much wealth that I have a monthly income of 1,500 euros. That means I need between 400,000 and 500,000 euros for this, based on the current state of knowledge and investment types that I have mastered. I will probably be able to book around 3,000 - 3,500 euros through investments and affiliate income at the end of this year. And I think that's really great. After I had positioned myself openly about what I-want-to-be-financially-free, my self-confidence and motivation got another powerful boost.
And that's exactly what I can recommend to you. Make a plan for where you want to go and what exactly your goals are. Divide this goal into annual interim goals and work hard on it and stand by it if you please. The moment you are so convinced that you are describing your path to other people, you will become even more successful.
You can do a lot right on the way to your passive dream income, but you should still pay attention to the following things in order not to go wrong:
- Never underestimate the power of a single cent
- Don't let a stranger manage and invest your money
- Check if you really have assets (not liabilities)
- Don't look at the profit in euros, but in percent
- Eat yourself healthy and rich
- Invest with wisdom and knowledge
- Never count on the money invested
- Have goals and stand by them with confidence
If you do these things right, you will achieve your financial freedom even faster.
And finally, the solution for all cigarette smokers. If you devour a box for six euros every day, that makes 180 euros a month. For 40 years it will become:
So good luck getting rich and a nicotine-free life
I've been using Exporo for a long time >> real estate projects with little money finance and at the same time get something from value increases and regular rents - exactly my thing. Exporo is Europe's market leader in the field of digital real estate investments and 180 readers of my blog and newsletter have already registered and successfully invested. Exporo AG is a partner of mine and I was able to arrange a great welcome bonus with which you 100 € on your initial investment and you can give yourself a little pleasure. >>https://p.exporo.de/bonus100/?a_aid=63992
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