COMMON MONEY MISTAKES TO AVOID

 

COMMON MONEY MISTAKES TO AVOID

Experience is the best teacher. But why wait to learn from your own experience while you can pick the lessons from other people's experiences? Well, if you are like me, then you know making money is awesome. Spending it is way gratifying. However, with poor management, your hard-earned money can be flushed down the drain with only one snap of a finger. After intensive research, I discovered that money is a game of numbers, and if calculated well, you get to enjoy its benefits. Money can either be a slave or a master. A rule of thumb: If you bleed money more than you make, then you are a slave to money. However, if you make more money than you spend, then money becomes your slave. In this article, we will bisect ten common financial pitfalls to avoid. 

Not budgeting

Have you ever thought of the consequences of not budgeting? Definitely yes!! If not, this is the time. When it comes to personal finance, a number of negative outcomes can result from operating without a budget. These outcomes include, but not limited to, overspending and going into debt. Planning how to spend your money brings clarity on whether your priorities are right regarding how you spend money.

Disregard towards savings 

From the word go, saving money is essential when it comes to financial discipline. This is because it covers you during a financial crisis. Additionally, saving money can help you pay for large purchases, vacations, college education, avoid debt, and ensure a sense of financial freedom.

It is always advisable to save money for a longer time, which in return will accrue interest and the savings will see you through old age. You can begin with 10 to 15 percent of your monthly income as early as in your twenties. Thank me later.

Spending more than you earn

The frequency of spending more than you earn is the easiest way to accumulate debt. To avoid incurring debts, you will have to find a way of spending less or earning more. It is always good to live within your limits. Spending habits should be based on how much you decide to save monthly. For example, if you make $30,000 monthly and you want to save $10,000 of that, then all you need to do is figure out how to live off of $20,000.

However, my best advice would be to find new ways of making more money if you wish to spend more.

Not setting financial goals

Building wealth is a process. Time is not all it takes. There is also a need for financial goals. Setting financial goals is essential for financial success. They can be long term like starting up a company or short term like paying off debts. Once you have set the goals, it can help you stay focused and work towards accomplishing them.

Not having an emergency fund

Emergencies can happen to anyone, at any time and any age. It can be losing a job, having to repair a crashed computer or even the sudden death of a family member. Soaring through all these can be hard with no emergency fund in place. An emergency fund can protect you through unforeseen circumstances and give you peace of mind in such stressful situations. Just like savings, you set up an account kitty for emergencies where you deposit a certain amount of money each month. 

Not discussing finances with your partner

Most couples find it difficult to talk about money. But if you decide to let someone be part of your life, then it’s time to have the talk. Have open discussions concerning your views on money and work on coming up with financial goals together. It can be planning to make big purchases, investments, children’s education, saving for retirement, etc. Dividing money-related tasks between you and your partner will not only make marriage life smooth but also make you enjoy every bit of your financial life.

It is never too early or too late to start embracing the right ways to manage your money. The sooner you start avoiding the common money mistakes the better. All the best!