Change the Way You Think About Saving Money and Increase Your Wealth

Our idea about saving money comes, from many different sources. Some good and some bad. Because of this there are those who make a lot of money and have little in savings and retirement, and very little financial wealth. For them paying monthly bills is a chore, often times paying only half of their bills per month. Then there are those who make marginal incomes and save money, pay all of their bills every month with ease, and retire comfortably. The difference between the two is their money IQ. The former has a high income, but a low money IQ. The latter has a modest income, but a high money IQ, and substantial financial wealth.

You can’t change your money IQ until you understand where your ideas about saving money comes from. Ask yourself–Do I think about money as my parents do? Do I listen to propagandized television commercials? Do I listen to media sound bites to encourage me to spend money I can’t afford, on products I don’t need? Some of you get your money IQ from financially strapped parents who overspend and buy a lot of things they don’t need. If you see the results of your parents low money IQ, now you can change the behavior in your generation.

Once you determine that you have a low money IQ and are in high debt, usually low on money, living without a savings, or not able to retire in due time, then you can change. Only then are most people willing to take a close look at their usual source of information.Once you determine where your low money IQ comes from you can work to delete that information as your source, and choose healthy sources that will increase your money IQ, and your financial wealth.
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You can determine if a source is healthy and will increase your money IQ if it encourages you to: 

  •   Live within a budget based on your income.
  •  Stay out of department stores buying needless things because they are on sale, make you feel good (for about 10 minutes), or you have nothing better to do (there are always better things to do).
  •  Save some money every single month from income for emergencies and long-term expenses, at least 10%.
  •  Maintain your home from income and savings, not home loans.
  •  Understand that material things, (homes, cars, clothes), are not wealth, but instead the material things you actually own, coupled with your savings, investment and retirement accounts. It is your net asset value after you deduct what you owe that counts.

Put the maximum into a retirement account whether self-employed or with an employer retirement savings account,( at least half the maximum to start).

Buy a home that easily fits within your income budget; start with the monthly payment you can afford and work backwards to determine the priced home you can afford (use online calculators).Some calculations will inform you that you are not ready to buy a home yet, more income and savings may be in order.

Understand that when you buy a home you will need substantial money for:

  1.   A down payment and
  2.  Closing cost. (Sometimes desperate sellers will agree to pay these cost)
  3. Maintenance cost after the sell should also be considered.

Pay off all loans as quickly as possible. When you have college loans, home loans, and car loans — pay extra every month to pay them off as quickly as possible and live loan free some day.

Stay properly insured so you won’t loose everything you hard for if something goes wrong.

Choose a college you can afford and not based on so-called “top ratings”. Many good colleges are not included in these ratings. Cost should be the number one factor in choosing a college to keep school loan debt at a minimum. Attending “too-costly” colleges is a major factor in the high college drop-out rate.

Study basic investing so you will understand the difference between a money market account, a certificate of deposit, an annuity (there are many types), a low cost mutual fund(there are many good ones), or a savings account.

Stay away from “pie-in-the-sky” opportunities, “get rich quick scams”, multi-level marketing scams, pyramid scams, or questionable investment advisors–such as individual Bernie Madoff type firms.

Stay away from predatory loans such as interest only home loans, pay day loans, car title loans(most folks don’t get their car back), and reverse mortgage loans(most folks don’t read the fine print).

Read consumer based books, magazines and websites that teach you about the value of money, budgets, and savings accounts.Be a leader in your financial decisions, not a follower. The leader does research, reads the fine print, and thinks that “if it sounds too good to be true, it probably is”. Many followers purchased homes during the real estate boom only because they felt, “everyone else is doing it”, even though they were warned by high money IQ friends or family members not to, but did, and they ended in foreclosure and with  bad credit like everyone else.

Many smiling salespeople will sell you anything for a commission. It is your responsibility to protect yourself, do your own research, and learn the power of the word, “no”. There are a whole host of places where you can do research immediately typing the phrase into Google – “What is wrong with ——-“. You insert your concern into the blank space. If there are problems with the product you are interested in, then you will get a list of websites discussing the problems. Is this full proof, absolutely not, but in most cases it will give you a good idea about the real information available for that product. There are many scam artist on the internet giving out false information for profit. Be cautious, read several articles, make sure they come from legitimate newspapers or magazines. There are also legitimate newspaper and magazine that are only on the web. Educate yourself about the availability of legitimate information. Only then, will you develop a high IQ for saving money, money management, and interpreting information, will you increase your wealth.

Lois Center-Shabazz
author of, Live Rich Save Money! Budget Diary
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author of, Live Rich Save Money! 68 Powerful Ways to Save Money, Now and Forever
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