Learn About Money From People Who Failed
By Will from Holland
We all know millionaires know how to make money. I've always wanted to know why most people don't become millionaires or don't succeed when it comes to simply having enough money to lead a stress-free and independent life.
Here are five key lessons I've learned so far from those who fail becoming millionaires:
- Don't assume higher income always means more savings. If you increase your spending every time your income goes up, you're standing still, not moving forward. A perfect example: your income goes up, and you immediately get a more expensive car or apartment.
- Don't assume higher incomes are guaranteed for life. Ask somebody you know who worked on commission for the last few years if their income stayed up during the meltdown. Here's a smart tip: always assume your income may drop. Repeat that thought every day. The more prosperous you get, the more careful you should become. I've got a friend whose income skyrocketed during the meltdown, but she's living exactly like she did before the money rushed in. "I know this can go away," she says.
- Pay attention to cash flow. Even if you're working at a McDonald's, cash flow impacts your life, whether you like it or not. But if you're starting your own business—even a web design project from home—cash flow determines if you survive or not. And many new businesses—including billion dollar businesses—fail because of cash flow, not a lack of customers. Example: you have a chance to expand your web-design business: five new clients want a website right now. Excellent! But you'll need a paid employee and an expensive new computer to handle the work. Does that much new business make sense cash flow-wise?
- Never let failure slow you down. Ever heard of Mark Twain? He spent years paying off debts after a business meltdown, but never dodged his debt or lowered his head. Most millionaires will tell you they failed many times before making it big.
- Confront money issues head on, don't ignore them. Whether you're dealing with your own household budget or your rocking web-design project, be up-front with people you owe money to the minute you realize you can't pay them as agreed. Reach out to them—don't wait for them to contact you. If you have debt problems and belong to a credit union, call them for credit counseling.
If you're like a lot of people, you'll fail a few times when it comes to money management before you succeed. So what? Learn from those mistakes and you've got a better chance down the line to be the millionaire in someone else's story about success.