1. We prioritize spending rather than savings so as not leaving anything.
“Every time they get their pay, they usually spend it first, and if there’s the rest, that’s what they save,” said Fitz Villafuerte. “In general, there is nothing left at the end of the month.”
Solution: Reverse the process. First separate the portion of your salary to save money, then please spend the rest. Villafuerte also recommended to ask your company’s HR department for help: “You can automatically debit your savings. Ask your HR department to send a portion of your paycheck to another account at the bank payroll (payroll) office.” This proactive method makes saving money is not so bothersome. “That way you do not feel that you are saving money,” said Villafuerte. “You do not feel guilty if you spend what is left. Saving feels lighter and more profitable.”
2. We’re investing before making an emergency fund.
Villafuerte observed that the second mistake that people often do when they get the extra money is invested before they set aside a portion for emergency funds. “They do not use them beforehand to prepare an emergency fund,” he said. Emergency fund is the basic foundation of the portfolio each person, the number is: money worth six times the cost of your monthly household expenses, saved for emergency needs.
Solution: Villafuerte recommend having a fund before you invest your money. Not that he did not consider it important to make your money grow, but like the previous problem, the problem to be faced is something that is a priority. “The cost of a hospital, a home or car repairs sudden you can not set aside.” Without an emergency fund, you will be looking for debt or dilute your investment immediately.
3. We avoided the stock market.
Villafuerte considers stocks confused many people. “When you talk about the stock market, people think about trading stocks, and they got scared, because they think it’s like gambling,” he explained. “That’s the reason why it is less empowered as an investment vehicle.”
Always remember: Trading stocks is only a small part of the stock market. “There is also a stock market investment, the more of a long-term,” said Villafuerte. “If people are more educated about investing [about buying stock or hold it for five to seven years] you’ll see if you get more than if you just put your money in time deposits.”
However Vilafuerte not give advice about the stock market. He prefers to refer a broker: “They offer a free seminar on stock market investments.” There are many quality entries out there – but you should be careful about it.
4. We get financial advice from the wrong people.
Villafuerte has seen this too often – new entrepreneurs ask their friends for free business advice and hit the rock. “We like to take shortcuts,” he added. “They do not see things from a business standpoint, they do not ask a businessman, ‘how do you run your business?’ so it increases their risk of failure. ”
Always remember: There is a reason why certain information is free and readily available, Villafuerte said: “Because it’s not the best advice you can get.” Quality business information more difficult to obtain. He remembered his friends who wanted to do business laundry and asked his advice.
“I told him about the seminar laundry shop operation at Nagoskwela: ‘Why do not you present there? You will get advice from people who know the business.'” His friend did not respond to the idea.
“Fortunately, the business was not destroyed, but it requires three years before the business was stable.” Compared to other friends who attended the seminar that laundry. “He was attending a seminar laundry shop – new shop opened just three months, but it’s stable,” recalls Villafuerte. “From there you can see the difference: ask for advice about money, business, or investment, from people who just you know, rather than get it from people who are experts in that field.”