So many of us struggle with money. Maybe you are one of those people? if you’re not, perhaps you know a loved ones or friend who has a bad time with their finances? Millions of people in this country and more around the world make financial mistakes. This is because they do not have good money habits. These habits are usually not taught in school. While we learn about history and geography (which most of us will never use), personal finance which is highly important is not taught. Because of this, many people never realize just how dangerous poor spending habits can become. Financial problems have led to countless people going through bankruptcy, divorces, suicides and more. Lets look at these errors made and focus on 7 of the most common financial mistakes. Avoid them at all cost.
This is probably the biggest one of the lot. There’s a saying – cut one’s coat according to one’s cloth. It basically means that you should live within your means.
We live in times when people want instant gratification. They buy things on credit and before they know it, the bills start piling up and they start scrambling and panicking because they’re in debt.
Buying based on emotions
Millions of people purchase items just because of how they’re feeling at the moment. If they see advertisements for the latest and greatest car, they quickly put a down payment on it just to feel like they’re cool and hip.
That’s all good if one can afford the car. However, if you’re overstretching yourself, the upkeep of the car will become your downfall.
Using credit cards for everything
Next on our list of financial mistakes is credit cards. These are great, if used properly. However many of us use them as a crutch. More people go into debt because of credit cards than any other thing on the planet. The banks know this, and they love it. Banks will act like your best friend offering you perks and cards making you feel like you’re a baller.
People often get as many cards as they can and spend without worry. When the balance starts snowballing, and the interest payments skyrocket, then they realize just how merciless the banks actually are. It’s best to wise up early.
Falling for ‘get rich quick’ schemes
Anything that sounds too good to be true usually is. Thousands of people get conned on a daily basis to buy financial plans they don’t need or get tempted to invest in things they’re clueless about.
The salesperson’s pitch is emotional and enticing. They invest in some supposedly profitable plot of land hoping to reap returns, only to discover that their investment is worthless and now their money is either gone or they’re stuck with a burden they don’t need.
Failing to plan for retirement
Have you thought about your future? This is often one of the most common financial mistakes. Most of us live to a ripe old age these days, and yet so many people fail to plan for retirement. You must plan to build a nest egg for the future (factoring inflation in your planning) so that you can retire comfortably. Having to work when you’re a senior can be highly depressing and tiring.
More and more seniors are entering the workforce nowadays as they struggle to keep up with their bills. To avoid being one of them, planning early is crucial.
Not earning more
It’s easy to find one job and stick to it for the rest of your life. Millions of people do this and stagnate. Their salary over time doesn’t really increase that much and they’re always living from pay cheque to pay cheque.
One of the best ways to improve your finances is to make yourself more valuable to the marketplace. This will allow you to command a higher salary and have more money. If you increase your income and maintain your current expenses, you’ll have more money to save.
The final mention on our list of financial mistakes is not saving. This is one of the most important habits in life. A common mistake people make is not saving any money. They try to save what’s left after spending, and often they find that there’s nothing left to save. Instead you should save FIRST and then spend what’s left.
Always save a portion of all that you earn. Over time, you’ll have a sum of money that you can rely on if any problems arise. Just the knowledge that you have some money on hand will give you more confidence.
These 7 financial mistakes mentioned above can lead one to financial ruin if they’re not addressed. Now that you’re aware of these mistakes, check and see if any exist in your life and remedy them quickly. It takes a long time to recover from a financial mess. So, prevention is better than cure.