5 PERSONAL FINANCIAL MISTAKES WE MAKE
The way we see things, the way we plan, the way we spend our money, the way we live. Yeah, that's where we differ from them. And the good news is that you can avoid these personal finance mistakes by committing to them. Know where you are being destructive and change yourselves to make a better life.
Have ever thought about why you are not a millionaire even if you are rich?
Wanna know what's the difference between you and millionaires?
Why we are still the same person in the same financial status that you were a few years back?
The way we see things, the way we plan, the way we spend our money, the way we live. Yeah, that's where we differ from them. And the good news is that you can avoid these personal finance mistakes by committing to them.
Know where you are being destructive and change yourselves to make a better life.
IMPROPER BUDGET PLANNING
Forecasting and Saving money for the future is an important thing in everyone's life. Budgeting helps you to differentiate our expenses into two categories: your needs and wants. While the absence of a budget plan may get you in dept, proper budget planning helps you to get out of debt. A budget plan also helps you in tracking and upgrading your financial situation.
You can have your budget plan in 4 easy steps:
- Calculate your monthly income. This also includes your investments, loans, salary, pensions, and every other source you get your money from. And record it so that it helps you to have a clear picture of your total income.
- Calculate your expenses. You need to determine how, when, and why you spend your money by reviewing your financial records. If your records aren't clear, consider keeping a financial diary to track your spending.
- Separate your inevitable expenses from avoidable ones. Expenses like our house rent, university fees, or insurance will be in the inevitable category where the expenses from clubs, parties, and other entertainments are evitable. Look out for the pattern in your spending. Knowing your spending pattern will help you with better planning.
- And, at the end of the month, if needed, re-examine your budget and make needful alterations. This requires where your income varies or gets a sudden change in your expense like an emergency.
Here's where the second mistake happens to many of us.
NOT HAVING A SAVINGS ACCOUNT
Just like Miracles, Disasters too happen unexpectedly. And Savings accounts will save you when you need it most, whether unforeseen challenges occur, emergencies happen, or when you're gonna start your entrepreneur journey. We can always use a savings account as our emergency funds. You can also set aside a portion for emergencies so that your other plans don't get confused.
Having a savings account helps you to be financially independent and to be a successful builder. This is where even a single rupee matters. Every rupee you can save is like a drop of water. Like our proverb goes, "Many a Little makes a mickle".
Just imagine that moment where you buy your favorite car or go to your dream destination with your savings. Wow, that would be great right?? The only thing you have to make sure of is to calculate your expense and set a deadline and save the corresponding amount. You can even save enough to invest in the stock market. Yeah!!
INVESTING MONEY ON TEMPORARY ASSETS & NORMALIZING DEBT
- Having debts is okay. But staying as a debtor is not right. Try to pay off your debts as soon as possible. That's one of the best ways to be mentally at peace so that it will help you to focus more on yourself and your vision. Try to pay off your debts in an order where the biggest debt is paid first. That's way better than paying off small debts.
- Another common mistake we make is that we focus more on temporary needs where we get trapped in them that we are unable to save for long-term Assets.
For example, investing too much in temporary assets like luxury cars when you don't even have enough money to buy a budget car is utter nonsense. Instead, try investing money in long-term investments like the stock market or buy a flat and give it for rent. Simple and safe.
GET TRAPPED IN SCAMS
We all get Scam messages and Calls where we are offered money and gifts. There are also e-mail & phone call that may request you to transfer funds overseas or messages that ask says "You won the lottery, please provide your details". Being in a transition stage of technology, it's not only the illiterate ones who get trapped in this. Though the technology had developed too much, cyber crimes had also increased the same.
Do not fall for these scams and remember nothing comes with a price.
HESITATING TO MEET FINANCIAL ADVISORS
In case you are too confused about what to do, don’t hesitate to meet the financial advisors. Especially when you're in debt. Advisors can give you better ideas to save yourselves from debt and to help you to make a budget plan. Planning your finances is an important thing that we should rely upon. Financial independence is one of the main factors which leads to a happy life.
Whatever the situation may be, wherever you are, whoever you are with,
Remember, You should be your priority.
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of MakeBetterLife.)