4. Buying liabilities from your salary

Never buy liabilities from your salary. Your salary should be used to cater for financial and investment needs.

Unless you want to work for someone else for the rest of your life, do not buy liabilities from your salary.

The problem with liabilities is that they keep demanding more money over time.

For example, a personal car will keep demanding fuel for the rest of its life. This will ensure that you have nothing to fund your financial growth at the end of the month.

Use your salary to invest and then use the proceeds from your investment to acquire liabilities.

5. Consuming what you do not have

Many people consume everything they have and even what they do not have. This means that they borrow to finance their consumption habits.

I have seen many people who borrow to do birthday or wedding ceremonies. Others borrow to purchase a new sofa set. This is a big financial mistake.

This is called consuming your future. You are eating what you are supposed to get in the future. It dooms your financial future and keeps you in constant financial struggles for the rest of your life.

6. Buying more liabilities than assets

If your liabilities consume more than your assets bring you, you will go broke. If your business brings you 1000 dollars per month but your car and house consume 1200 dollars every month, you will go bankrupt.

Accumulate more assets than liabilities and make sure that you get more from your assets than your liabilities consume.

7. Not having multiple sources of income (MSIs)

This is one of the worst financial mistakes people make. Many people just rely on one source of income for survival.

When they lose that source of income, they become beggars. This is not financial prudence.

I am always astonished by people who only bank on their jobs for financial provision. This is financial suicide. Such people go into depression when they are retrenched by the companies they work for.

If you are serious with your financial life, make sure you invest in the following:

·     Business/ businesses.

·     Real estate.

·     Stocks/ bonds.

·     Precious metals.

At least, have 3 of the above. When one industry is down, the rest will keep you afloat.

8. Increasing your spending when income increases

This is a common financial wrong. It is called the Rat Race. The spending is always chasing income. When the income increases, the spending also increases.

In the Rat Race, there is never money for savings and investment. The increase in income is never beneficial. It does not help your financial position. In most cases, it just makes you more comfortable and not better off financially.

This is what is holding many people back. They go to the streets to have a pay raise but when they get it, they only buy a bigger car rather than increase their investment portfolio.

At the end of their working life, they will have a junk of liabilities and a very poor financial position.

9. Not taking financial risks

Greater financial risks lead to higher financial rewards. This is undisputed.

If you are not ready to take great financial risks, you are not ready to get great financial rewards.

Since many people are not ready to take financial risks, they would rather not invest. They hoard their money in banks. This money will be eaten away by inflation over time. Other than making them better financially, it makes them poorer.

When you get a great opportunity, make the move. Put in the resources and learn as much as you can. With knowledge, risks are greatly diminished.