Learning from Financial Mistakes

In the last 18 months, there has been a significant increase in my personal financial capacity. However, the greatest challenge is to keep a reasonable lifestyle against my earning ability. It was not easy, I was feeling that I can buy more than I was used to. However, in the process of finding the balance, I was committing financial mistakes due to my prior misconceptions. This will be the focus of this blogpost.

1. Working for time, not for results.

I have once published a blogpost on what is expensive and what us cheap. This concept has been solely based on hourly rate. Perhaps, it not wrong to write that post. It was mainly an attempt to create a guide on determining the appropriateness of one's spending habits, in comparison to one's earned income. However, the mistake occurs when one focuses heavily on hourly rate, and not on results. This concept is however applicable to all jobs, whether service, manufacturing or industry-related. I consider this as a mistake in a way, not entirely though. I believe one could have income, which is based on hourly rate; and another which is entirely results-based. This is ofcourse possible when a person has reached mastery with one of the two first, then the other follows. This should not be done simultaneously, a mistake I am having a hard time changing.

2. Focus on liabilities, not on assets

Recently, I was travelling to several places. Honestly for now, I could afford to do that if I only have to spend for myself. Furthermore, I have regular subscriptions on mobile TV, gym membership and telephone, as well as gadgets and books. All of these I did not have before I started with my current job. I thought I was trying to pamper myself with all those stuffs. However, those are only liabilities, with little or no earning capacity. Yes, indirectly for some of them, it could promote healthy lifestyle, which is itself an investment. But that is not enough, I should look for opportunities that will give more income than expenses. This is a financial mistake I need to rectify.

3. Ignorance on real investment opportunities.

At this point in time, I am quite afraid to venture out in real estate business. I know quite well what real estate is as a profession, but not as an entrepreneur. My perspective is limited to working in a real estate company in the future, but not really to actively engage myself in business. I do not know how for now. My mistake lies on my hesitancy to seek education on this matter, as well as other methods to acquire passive income. I have some ideas on my mind, but that simply was not focus. That is considered a financial mistake.

This blogpost has been greatly influenced by Rich Dad Poor Dad teachings. Although I do not agree with all of it. For example, being discouraged not to actively participate in labor unions to increase once hourly rate. I believe this argument was quite built in a big capitalist market like the United States. However for those living in Norway where social equality is a main issue, the desire to increase one's salary is natural. The salary increases is a measure to eliminate socio-economic gaps, while maintaining high salary rates across all levels, regardless of where one works.

My take is that there is not incorrect to ask for a salary increase. What is wrong is to be highly dependent on this salary, without trying to explore possibilities of earning passive income. The rule of the game is to earn as much as possible using least amount of effort in a legal way. Personally, I thought I simply have to work more and more, compromising my personal life just to live a decent life. It is possible to work and earn significantly, without pushing oneself to exhaustion. Hence, this is not just about financial mistakes but also personal misconceptions.

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