By JASON BUTLER
Charlie Munger is 97 years old and has been Warren Buffett's business partner for five decades. Despite giving away vast amounts of his wealth, he is still worth nearly $2 billion.
One of the traits that has helped Munger become wealthy is his ability to learn from his mistakes, and also those made by others. Munger advises "I like people admitting they were complete stupid horses' asses. I know I'll perform better if I rub my nose in my mistakes. This is a wonderful trick to learn."
If you continue through life making the same mistakes, don't be surprised if you don't get different results. To help you improve your financial situation, I've pulled together 12 common money mistakes made by me or others.
Thinking you'll get better with money next month or next year. Tomorrow never comes. You must start today. Take one small step to improving your situation and build on that. Remember, progress not perfection.
Telling yourself that this year was an exceptional year for spending and next year will be lower. Every year will be an exceptional year, so stop kidding yourself and just assume that your current expenses are the reality. Once you are truthful to yourself, you can make progress.
Believing that you don't need a budget or spending plan. You might be a high earner. You might have accumulated some wealth. But if you don't tell your money where you want it to go, it will go somewhere else. You’ll need a spending plan for the rest of your life.
Thinking that cash is a low-risk, long-term home for your money. If inflation doesn't kill you, then your lack of wealth probably will.
Believing that you or an expensive financial adviser or investment manager can consistently beat a low-cost global equity index fund. You can't, they can’t and you don't need to anyway. The long-term (25 years+) return from a global equity index fund will be more than adequate compensation for the risks and enough to meet your needs.
Using debt to fund anything other than 80% of the purchase price of your own home. When you factor in the risks involved in debt, and the financial peace that comes from being debt-free, it's just not worth taking on debt. Remember, the borrower is a slave to the lender.
Thinking that property investment is easy or low risk. It's neither. Property investing can be lucrative but it is a business. And like any business, it takes work and involves many risks that are not always apparent.
Spending money on holidays, cars or other luxuries or lifestyle treats when you don't have an emergency fund or still have non-mortgage debt. Get those two things sorted before you ease up and start spending money on fun.
Having a 'victim' mentality. "I'm too old", "I'm too young", "I don't earn enough", "I've got high expenses", "I'm unlucky". Instead of telling yourself "I can't", turn it around and ask yourself "How can I?".
Not buying the right type of income protection or life insurance. You think it won't happen to you and the chances are it won't, but the impact could be devastating for you or your family if it does.
Confusing other people's extravagant lifestyles with financial success. There is a good chance that they are up to their eyes in debt and are living payday to payday. Most wealthy people live modest lifestyles.
Pinning your self-worth and happiness on how much you earn, accumulate or spend compared to others. Run your own race based on what you value most.