Financial Beliefs May Misguide You, Let Them not Determine Your Financial Decisions

There are some common beliefs that many people put in to practice without taking into consideration if they fit them or not. If such beliefs are used to make one’s financial decisions disappointing results are likely to result.

One such financial belief is about material possessions one has and the more lavish they are spending the better off they are. The glitzy, attention-grabbing ways of the pseudo-rich deceives many about the true spending habits of the genuinely prosperous. The pseudo-rich often have a fleet of luxury cars, and an amazing generous disposition but with few invested assets. Do not be cheated because many of the people driving around in comfort owe more than they own. Genuinely rich people are more interested in true prosperity and security, not conspicuous consumption of status symbols. What may look like lavish spending to other people may not really be in relation to the affluent person’s income and net worth.

Another mistaken financial belief, but strongly held is the fact that owning a business is the only way to succeed financially. But what there is is that the high profile image of such success overshadows the realities of starting a business. It is a difficult, stressful and risky undertaking for which every success story has scores of failures. Statistics indicate that about 90 per cent of all new businesses collapse within five years, with the owner losing the capital and being left with debts. This is not to discourage prospective business people but to ensure they know what they are up against.

However since we are not all endowed with the same talents and abilities, not everybody can be a successful business person. This does not mean that the rest of us are doomed to external poverty. There are many professionals and employed people who are living prosperous and comfortable lives, with well-taken care of families and a secure retirement to look forward to. You can be one of these individuals if you develop a personal financial plan and put it into action. It is advisable to have a professional and qualified financial planner develop such a plan for you.

Another mistaken financial belief is that having a high income equals financial security. While it is important to try and increase your income, what is even more important is what you do with your current income. How much do you save and invest?

Financial security comes from ownership of invested assets coupled with management of risks of loss by the purchase of appropriate insurance products. Even as you enjoy a reasonable standard of living right today, ensure you spend less than you earn and use savings to acquire investment assets as you go through life. it doesn’t matter whether you own millions and millions of dollars. If you spend more than you earn, your circumstances are getting worse, if you spend all you , you are just treading water. The only viable road to financial independence is to save and invest part of your income.

Saving is not easy, but it is easier than living in difficult financial circumstances. A realistic personal budget, automatic payroll deduction or bank standing orders and avoiding unnecessary loans will produce the money you need to save. Once the saving habit is established, it becomes a normal and enjoyable part of your life. Make sure you have the true set of financial beliefs in place in your life and learn how to question other beliefs before implementing them.

Poly Muthumbi is a Web Administrator and Has Been Researching and Reporting on Debt for Years. For More Information on FINANCIAL BELIEFS, Visit Her Site at FINANCIAL BELIEFS