The No. 1 Mistake People Make With Their Money

The No. 1 Mistake People Make With Their Money

By Charlene Oldham  GoBankingRates

Financial gurus Warren Buffett, Suze Orman, Tony Robbins and Dave Ramsey boast net worth figures in the millions — or, in Buffett’s case, billions. Many of their followers can only dream of becoming multimillionaires or billionaires. However, each money expert offers plenty of practical advice the average Joe or Jane can follow to clean up their spending, savings and investment habits, and retire rich.

Here are seven pitfalls to avoid, along with money management tips from Buffett, Orman, Ramsey, Robbins and other financial experts that almost anyone can implement, regardless of their current bank balance.

1. Spending Too Much on Wants

Too many people spend their lives and hard-earned cash buying things that have little or no lasting value, said Robbins, whose net worth is $480 million, according to TheRichest. “You have to decide that you’re not going to be a consumer, you’re going to be an owner, no matter how little money you have,” said Robbins in a CNBC video.

“If you gave up one night out a week of meals, and you had a pizza and saved $50, then you put the $50 aside, and you multiply that over the year, and you multiply that over [30] years — when you’re getting an 8 or 10 percent return, you find that comes to about a half a million dollars just by making that one change,” he said.

2. Overspending on Needs

It might seem these first two mistakes are the same, but some spending can’t be avoided. Everyone needs a place to live, and probably has to spend at least some money to earn a living. Buffett, whose net worth topped $72 billion in March 2015, according to Forbes, is famous for frugal habits in both his professional and personal life. Despite a market capitalization of more than $300 billion, his company, Berkshire Hathaway, only employs about two dozen people at its Omaha, Neb., headquarters, to oversee administrative affairs not handled by its subsidiary companies around the world.

“It is also interesting to note that Buffet lives a simple life, choosing to stay in the same house that he bought in 1958, and keeps Berkshire Hathaway headquarters very modest,” said Doug Bellfy, a fee-only financial advisor at Synergy Financial Planning in Glastonbury, Conn. “Though he could afford to spend much more, he lives under his means and finds frugal ways to stay satisfied.”

3. Not Saving Early

“Well, I think the biggest mistake is not learning the habits of saving properly early. Because saving is a habit,” Buffett said on the Dan Patrick Show. Those who save early will get the most out of compound interest.

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