The 13 Top Financial Mistakes Entrepreneurs Make

The goal of this series is to not only share with you "The 13 Financial Blunders Newly Successful Internet Entrepreneurs Almost ALWAYS Make" but also give you some ideas to make sure you avoid these VERY costly but easy to make mistakes.

I will admit it. I made some HUGE mistakes when I first started to see some financial success in my Internet business ventures.

And over the years have seen friends, clients and other up and coming Internet Entrepreneurs make these exact same mistakes too.

And I would wager you either have made or will make several of these 13 mistakes yourself.

My goal is to make you aware of these mistakes so you can avoid them from this day forward because they can be VERY costly and negate the success you are creating.

Today we will focus on two of the biggest, then over the coming days I will share all 13. I highly recommend "subscribing" to the RSS feed for this blog so you do not miss any of the 13 blunders.

1) FUTURE SPENDING

This one will "seem" very simple and it will be easy to blow it off and say "this doesn't apply to me". However I have seen even the smartest people I know (myself included) come under this spell and months, even years later they have formed bad money habits and really compromised their financial situation.

Future Spending is when people base their current spending on what they expect to make in their business in the future.

The justification they make to themselves is, I am doing $X amount right now and just by doing these things I will increase it to $Y level.

So they start spending today as if they are already making the $Y amount. That means they are spending money they don't have yet (and may never have.)

The problem is more times than not they don't reach that higher $Y level as quickly as they think, unexpected events come up that require more money than planned, or in some cases they never reach it or it takes months even years.

Yet they are still spending as if they are already there!

To avoid this is simple, although not always as easy as it sounds because Future Spending can be VERY alluring. Just be honest with yourself on what you are currently making and base all financial decisions on that CURRENT amount.

You definitely still want to stay focused on where you are heading and what you want to achieve, but you celebrate those successes and benefit from them when they ACTUALLY happen.

Remember a key philosophy of a successful marketer or life in general is to recognize the way things are, not the way you want them to be.
http://www.nitromarketing.com/blog/the-way-things-are/

2) INCOME TAXES

This one really screwed me up and it took almost 3 years to finally recover from this one BIG but VERY common mistake.

As an employee taxes are automatically taken care of. The IRS takes it right off the top of your paycheck and you never even have an opportunity to sniff that money.

However, as an entrepreneur that automatic deduction does not happen with our paychecks because we are no longer an employee. We are governed by an entire new set of rules.

These rules can be very lucrative because it opens up dozens of legitimate tax deductions
http://www.nitrotaxhelper.com/
that can slash our income taxes in half or more.

However if you do not have a plan to save cash every month (or at least quarterly) to pay your taxes, then when April 15th arrives you will have a BIG surprise.

For me, I combined Mistake #1 (Future Spending) with this second mistake and thought I would pay my taxes when they came due out of the profits I made from business at that time. Again I was spending money (for taxes) that I never had.

So when my $30,000 tax bill came I didn't have a single penny set aside for it.

Luckily the IRS let's you pay it off in monthly installments for up to 1 year (plus interest and penalties that add up quickly).

So now I had to pay an additional $3000 a month in unexpected expenses and I had to try and save for next year's taxes too. I was getting hit from both sides — the IRS was practically getting every penny I made for awhile!

It took me 3 very un-fun years to finally get caught up and for awhile now I have consistently been putting away my expected income tax as well as my house property tax every single month.

How to earn interest on your tax payment:

I use ING Directs's online savings account http://www.ingdirect.com/ that pays a 4.5% interest rate so I am earning a decent return on my money while it is sitting in a bank account waiting to be paid to the IRS for income tax or the city for property tax.

Hopefully you will take this advice and USE IT to avoid 2 of the biggest financial blunders most newly successful entrepreneurs make.

And be sure to come back to the blog and read all 13 blunders as they are revealed over the coming days.

~Kevin