most of us dream of achieving Financial Freedom but the harsh reality is that without the right systems in place it's all too easy to keep making the same money mistakes over and over again I'm Nisha I'm a qualified accountant and a former investment banker and over the past 10 years being surrounded by the topical Finance one of the most life-changing skills I Learned was how to recognize my own big money mistakes unlearn them and break free from repeating them in the future so in this video I'm going to share with you seven of the biggest
money mistakes that sabage your finances and tips on how to break out of them let's get into it number one keeping your head in the sand in Psychology there's a term for this and is called avoidance coping it refers to the way people tend to avoid information that they perceive as negative or threatening and this is particularly a thing when it comes to money and personal finance they believe that by not acknowledging a certain problem they can avoid the discomfort associated with it so for example someone might avoid talking about a pay rise with their
boss or their employer because they don't want to have that uncomfortable conversation or they fear being said no to or they might avoid speaking to their partner about their common money goals because they know it always leads to frustration when their priorities and values are so different or some people even just ignore bills or expenses because they can't afford to pay it by avoiding the discomfort that comes with all of this we might feel momentarily at peace but all we're doing is delaying the pain and postponing achieving our larger goals so what you want to
do instead is make it difficult for yourself make it difficult for you to bury your head in the sand one effective way to do this is by using something called called behavioral nudges and it's a concept I learned from the book Nudge the idea is to introduce subtle changes in the way choices are presented to you to encourage better decision- making without restricting your freedom so the core idea is to create systems and structures that make it harder for you to ignore important financial responsibilities and decisions so for instance setting up an automatic alert for
financial activities so every time your bank account hits a low balance or every time there is an upcoming bill payment you get an alert so that you're reminded of your financial situation another thing is automating your savings and Investments that can help you avoid the temptation to ignore these tasks behavioral nudges leverage psychology to guide you towards more beneficial behaviors without taking away your autonomy number two and this one is a huge one that would forever drain your finances as long as you let it and that is obsessively comparing we live in this extremely connected
world through social media and this means that you tend to see a lot of what others are up to or a lot of what they have that you don't this can lead to the popular phrase known as keeping up with the Joneses which describes a tendency to compare oneself with others and striving to match or exceed the perceived social status and the things that they owe when you obsessively compare yourself to others you end up spending Way Beyond your means or making choices based on what others have instead of focusing on what you actually want
you feel compelled to upgrade things like your house or your car or your lifestyle just to match others or to impress others you want to find something that helps you lessen the desire to keep up with others and the most impactful way I found for this is by having an ideal end today exercise take out a piece of paper and a pen and write down a simple bullettin list of the things you want in your ideal life it helps to be really detailed and really specific here about what your day looks like who you're around
what you're doing how you're feeling once you do this each time you buy something ask yourself if it aligns with your ideal end State list for example does buying that fancy car align with what you really want for yourself if it doesn't remind yourself of what you're missing out on and redirect your spending saving and investing to realign with the list that you've written number three is not turning your Capital quickly enough because of my work and my content about money a lot of people share their financial situations for me and I noticed that there
are so many people sitting on substantial cash reserves 50,000 60,000 or even 70,000 and they're just letting it sit in their bank accounts they're not even saving it for anything specific and they often say I've spent so long saving this it can't go but you have to switch your mindset because when you're doing this when you're just keeping it in a bank account it's one of the most inefficient use of your financial resources you're not letting your money circulate fast enough to generate even more money for you meaning you don't enjoy the benefits of having
your money work hard for you now there are short-term and long-term strategies that you can use to turn your Capital quickly and make it make money for you the best short-term way I found is by investing in yourself through education skill development that increase your earning potential this is one of the most underrated ways because you become a Priceless asset that just earns more so for example if you take a video editing course then you can start a side business where you offer this as a service this then diversifies your income sources especially if you
have a 9 to5 a good longer term way would be investing in index funds that track the S&P 500 or the global World index which historically have provided far higher returns than just a regular savings account this can help your money work harder for you potentially leading to better Financial growth compared to just leaving your funds in a low interest savings account when you don't actively manage and deploy your Capital to maximize returns you lose out on making so much more when it comes to short-term strategy and investing in yourself your education your skills one
of my favorite ways to do this is by using skillshare who are very kindly sponsoring today's video skillshare is the largest online learning community for creatives they have all sorts of classes from entrepreneurship productivity interior designs hustle ideas marketing and that list goes on skillshare played a huge role in my growth on YouTube because it was the platform that I went to every time I was trying to learn something specific that I had no background in I would go to skillshare to find a class on it I watched classes on how to design a web
page how to script how to shoot how to edit and anything else that I was struggling with someone would usually have a really good class on it and it would help me go from complete beginner to a pro in a couple of hours especially on topics within the creative industry one of the first ones I watch was about how to build your dream business it covered everything from exercises that will help you find your brand message understanding who your idol audience is what social media channel is best for you right through to creating a social
media strategy if you are one of the first 500 people to hit the link in the video description you can get a totally free 30-day trial where you can binge watch as many of the classes as you want for free and if you do like it and you do enjoy the classes you can also upgrade to a premium subscription using the link as well thank you so much skills CH for sponsoring this video number for is not assigning an hourly rate for yourself the hourly rate refers to the value of your time it's the amount
of money you can earn per hour for the work that you do this is a really important concept because it helps you understand how to best allocate your time and maximize your earnings according to Nar rkin if your hourly rate is say $100 per hour then any task you perform that you don't enjoy doing and that is valued at a lower rate than that $100 so $15 or $3 per hour that should be out sourced or delegated because time is a finite resource you only have 24 hours in a day and you want to spend
that time as productively as possible on higher leverage activities that align with your original per hour rate and it's not necessary that it needs to be spent on higher leverage activities it can also just mean so that you have more time to rest and to re-energize so that the time that you are working is more productive so take a look at your daily task both at work and at home what are the lower value tasks that you could potentially Outsource or delegate so for instance if you have an identified job how much could you save
by Outsourcing your household chores like cleaning cooking laundry how could you then use that freed up time more effectively knowing your hour rate and identifying lower value tasks helps you optimize your time and maximize your earnings number five not living on the 90% we have something called the one coin NCoin strategy which is a concept that is written in the book the richest man in Babylon essentially it's about learning to live on 90% of your income so training your mind to find ways to only live on that 90% so that you can put the remaining
10% into savings or Investments if you're not saving or investing a portion of your take and pay you're going to find it really hard to break out of a cycle if you're always spending everything or close to everything that you make you'll always need to work for more and you end up never having your money work for you passively through compound interest if you're struggling to find a way to save and invest that first 10% a couple of things that really helpful is firstly by paying off any High interest rate debt I know this may
not make sense at first but paying off high interest rate debt first frees you up to save more towards your goals the second way is to automate your saving and investing wherever possible for example you can set up automatic transfers monthly or weekly from your um main account to a high interest savings account that makes the whole idea and the friction of saving investing kind of disappear and the Third Way is planning for large expenses so having large expenses like car registration holidays they will sneak up on you and really drain your savings or completely
debil your budget but by planning ahead and breaking down these big goals into monthly saving goals can help you avoid this number six focusing on cutting back instead of making more according to behavioral economics people tend to experience loss more intensively than the equivalent gain and this is a concept known as loss aversion so it might lead to people focusing on cutting spending to avoid the pain or financial loss rather than taking risks to increase their income even if the latter could result in a better Financial outcome now there's definitely a place for saving and
for scaling back on your expenses especially if they're big life goals like a house a car a wedding or even your kids education but the problem here is when you're so focused on cutting back on the smaller items and the pennies that you lose focus on mining for gold if you think about it cutting out daily lates might save you $100 a month but negotiating a $5,000 annual raise it's like saving 50 months worth of lates in monco there is a ceiling for how much you can save but the ceiling for how much you can
make is way higher if you want to learn about making more then I've got a video right here which talks about how to set up a side muscle whilst keeping your 95 number seven not tracking your expenses this like driving your car without a fuel gauge you never know how much you've used up or if it'll be enough to get you to where you need to go not knowing how much you're spending or where it's going leads to overspending it leads to running out of money it leads to so much Financial stress and this makes
it so much harder to save to invest to pay off debt to reach your financial goals so a good place you can start here is by tracking your SP spending just to see where your money goes each month based on this information and your short-term and long-term saving goals create a budget that includes all of your income sources and expenses and then look for areas where you can redirect your spending towards savings towards investing and towards debt payoffs if you need help in tracking these numbers I have a completely free resource that can help it's
an intentional spending template that over 100,000 people have used it brings down your spending into fixed costs which are all your essential living costs your future costs I.E your savings your Investments and then also your fund costs it also comes with a video on how to use it tips and tricks on managing your finances and a breakdown of what to include in each other the categories once again completely free a link is in the description so those are seven of the most common money mistakes that sabotage people's finances and how to break out them if
you enjoyed this video don't forget to subscribe if you haven't already and as there'll be a lot more of these kind of videos coming up
