Who Wants To Be A Nillionaire?

If you don't want to end up flat broke or deep in debt, then steer clear of these six traps!

"Hello, I'm Chris Tarrant, and welcome to Who Wants To Be A Millionaire? On tonight's show, we have Mr and Mrs Average from the UK. The Averages are facing hefty household bills, higher mortgage rates and rising taxes, so let's hope they go home tonight with our star prize: one million smackeroonies!" Wouldn't it be great if you could solve all of your financial problems by winning a big cash prize on a quiz show? Sadly, it isn't as easy as you think, as I discovered when my wife and I were in the hot seat opposite Chris Tarrant in December 2001. Instead of walking away with a cool million, I panicked, got the ninth question wrong and walked away with a mere £1,000. Aaaaaaargh! Although it's been over six years since that terrible day, my mistake still tortures me today. Nevertheless, I still aim to be well-off, but I'm doing it the hard way -- by making my money work hard and grow over many years. Sadly, with £1,412 billion of personal debt (including mortgages), we Brits are more likely to end up as guests on Who Wants To Be A Nillionaire than on WWTBAM! Still, it's never too late to give up your dream of winning the Lottery and, instead, take steps to improve your money mastery. You could start by avoiding these six slip-ups: 1.    Confusing wants with needs In the 1940s, psychologist Abraham Maslow came up with what he called the hierarchy of needs, usually shown as a pyramid. At the bottom are the physiological basics of survival, such as breathing, food, water, sleep, etc. Level two is about safety and covers property, employment, health and so on. The next step is the need for friendship, family and sex. Stage four covers respect, self-esteem and confidence. Finally, at the top of the pyramid are morality, creativity, problem solving and so on. Thus, once you have enough resources to sustain yourself physically and mentally, then many material possessions can be exposed as wants, not needs. In short, that must-have purchase may make you happy today, but this boost will be short-lived and ultimately unsatisfying! 2.    Not having a budget I'm very fond of a saying passed on to me by a manager early in my career: "If you can't measure it, you can't manage it." In other words, if you don't take steps to monitor your earnings and outgoings, then you have little chance of maximising your disposable income. For more advice on beginning to budget, read Make Feb 29 A Day To Remember. 3.    Not seeking out discounts Traders in the souks of North Africa are famed for their ability to haggle with tourists. However, you don't have to be in the bazaar in Morocco in order to haggle. Indeed, wherever there is a market of any kind, there are people willing to bargain, barter and negotiate. Personally, I try haggling in even the most exclusive stores. What's the worst that could happen? After all, if you don't ask for a discount, you certainly won't get one. Read my tips on how to negotiate in The Best Ways To Pay Less. 4.    Always paying on plastic If you're sure that you can always pay off your monthly credit card bill in full, then it makes good sense to pay for everything using plastic. Indeed, with a cashback credit card, you can earn as you spend. Likewise, feel free to wave your debit card about if you know there's no danger of going overdrawn. However, if spending on plastic is going to take you into the red, then think again. Borrowing on credit cards and overdrafts is very expensive, especially over long periods! 5.    Seeing your credit limit as a target Some people make the mistake of seeing their credit-card limit as a target, instead of a limit. So, with a credit limit of £5,000 and a balance of £2,000, some cardholders assume that they have three grand to spare. Alas, what they do have is a debt that is costing them perhaps 1.5% a month in interest, or £30 a month on £2,000. Ouch! 6.    Not having a cash cushion If you don't want to join the race to become a nillionaire, then there is one sure-fire way to opt out. It may be old-fashioned, but saving a sensible proportion of your income will always make sense. So, be sure to build up a cash cushion in the form of an emergency fund, rainy-day pot or nest egg. With a decent sum set aside in cash (say, three to twelve months' living expenses), you can clear more of life's little hurdles. What's more, having a decent sum in a Best Buy savings account means that you spend less on expensive or unnecessary insurance policies, which is a bonus! So, millionaire or nillionaire? Which sounds more appealing to you? The choice is yours! More: Find great credit cards, current accounts and savings accounts | 7 Ways To Beat Higher Household Bills | Current Discounts And Deals #28

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