Money mistakes smart people don't make
You don't have to be smart to get rich, but it certainly helps.
1. They don't spend more than they earn
In other words, don't spend more than you have. Those who routinely spend more than they earn doom themselves to a life of debt.
2. They don’t live without a budget
When smart people spend and pay their bills, they do so with confidence, because they live life to an orderly budget. In my experience, the best way to budget is by keeping a spending diary, recorded in a notebook or an Excel spreadsheet.
3. They don't buy what they don't need
The clever trick is realising the difference between what you need and what you want.
4. They don't buy 'big brands'
Smart people don't necessarily want to buy the cheapest goods, nor do they believe in paying silly prices for so-called luxury brands. What brainy people are after is the best value for money, which they know they won't get from fancy-pants brands.
5. They don't buy on a small scale
Buying items piecemeal without a shopping list almost always leads to over-spending. That's why they plan their shopping and buy in bulk to grab decent discounts.
6. They don't discard discount coupons and vouchers
The secret to getting rich is to pay less for everything you buy. Smart people use money-off coupons, loyalty cards and discount vouchers to save as they shop.
7. They don't buy without comparing prices
Astute people use price comparison websites to find the lowest prices.
8. They don't waste energy
You don't have to be a green activist to save money on your household bills. Saving energy by reducing your electricity and gas bills through energy-efficient living really pays dividends, and in hard cash, too.
9. They don't smoke
As well as being a horribly unhealthy habit, smoking costs a small fortune. A 20-pack of cigarettes costs around £9.25, so a 20-a-day addiction adds up to over £3,375. That sum could pay for a really nice annual holiday.
10. They don't pay their bills in cash
Bright people are aware of the generous discounts on offer when paying bills by direct debit. In some cases, these discounts can cut prices and tariffs by 10% to 20%, saving as much as £200 a year.
11. They don't keep 'dead' direct debits
Smart adults regularly check their bank statements, usually online, to see exactly what's coming out of their accounts. They're not so silly as to keep paying 'dead' monthly or yearly direct debits for things they don't need, such as under-used gym memberships, outdated insurance policies and the like.
12. They don't stick with the same insurers
Instead of lazily renewing insurance policies each year, they shop around for lower premiums or better cover. Likewise, they do the same for their investments, always seeking lower charges.
13. They don't keep the same mortgage
For most homeowners, their mortgage is their biggest expense, yet millions stick with the same lender year after year. Wise folk know that shopping around for a cheaper mortgage can produce savings of hundreds, or even thousands, of pounds a year.
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14. They don't buy rip-off warranties (and PPI)
Those who are good with money know that in-store extended warranties for electrical goods are a massive swindle. Rather than pay a small fortune for this rip-off cover, wise spenders create their own savings pot to dip into for emergency repairs.
15. They don't pay tax on their savings
Smart people know that saving hard really helps to build a brighter future. When they save, they maximise their returns by not paying tax on their interest. After all, who needs to pay tax, when you can shelter up to £15,240 inside an ISA this tax year?
16. They are not scared of shares
The long-term returns from investing in a diversified portfolio of shares are much greater than those generated by cash.
17. They don't invest in expensive managed funds
Picking the right fund managers is as tricky as picking the right shares, because past performance is no guide to the future. That's why they invest a large slice of their risk capital into low-cost tracker funds, which beat at least 80% of fund managers in the long run.
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18. They don't lose track of pensions
Saving steadily for retirement is a must. That's why they keep track of their occupational and personal pensions throughout their working lives. They also know that the free Pension Tracing Service can help trace lost retirement savings.
19. They don't take needless risks
The future is uncertain, so you need a safety-net to cope with life's hard knocks. That's why smart people buy life, health and travel insurance, as well as the more common car and home insurance.
20. They don't fall for scams
If sounds too good to be true, then it probably is. Clever people know how hard it is to earn money, so they're not fooled by scams and swindles that offer improbably high returns on their money.
Do you agree with your list? What other mistakes do you think smart people avoid making? Let us know in the comments box below!
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