It is highly important to Beware of These 7 Financial Mistakes and try to avoid them at all costs.
Note that this is not for those whose hardship has been caused by the COVID19 crisis…or any other financial hardship.
There are many people who are facing financial issues during the Coronavirus pandemic which is not because of some grave financial mistake of their making. It is because our country has been devastated by a pandemic for which there is no cure, and people have lost their jobs, and financial means.
However, it is reported that many people around the world face financial problems because they do not have good money habits. These 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, etc.
Beware of These 7 Financial Mistakes
1. Overspending
For many people, this could be one of the greatest occurrences within their life. It is important to think and curb this tendency if it is part of your financial management mistakes. There is 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, and they buy on emotions. People get lonely, they feel satisfaction in purchasing something they want. Most of us are guilty of this at one time or the other.
However, if buying things on credit and before one turns around, the bills start piling up and they start scrambling and panicking because they’re in debt.
2. Purchasing a larger home before they realize they still have other expenses
Many people want the largest home on the block, with the largest garden, and a three-car garage. Even though their debt-to-income ratio is in line to be approved, they forget that you still have miscellaneous expenses. Childcare, healthcare deductibles, clothing, utilities, and more. These items are not in the debt to income ratio.
It is wise to buy a smaller home initially, then move up to a larger home when affordable. This will help them to stay in line with what their income will allow and still be able to afford a Friday night dinner out.
3. Using credit cards for everything and paying minimum payments
Many people are living on credit and are into debt because of credit cards more 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. *This happens all the time…every company is out to sell you something. Those high credit card interest rates will take years to pay off.
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.
This is very high on the chart in reminding anyone to Beware of These 7 Financial Mistakes. Credit card debt can be overwhelming and cause other credit issues and damage your credit scores.
4. Falling for getting 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. They then discover that their investment is worthless and now their money is either gone or they’re stuck with a burden they don’t need.
5. Failing to plan for retirement – is one of the most overlooked financial mistakes for many individuals
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. While 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.
6. Becoming complacent in a career without advancement
It’s easy to find one job and stick to it for the rest of your life. Millions of people do this and become stagnate. Their salary often doesn’t increase that much and they’re always living from paycheck to paycheck. They are afraid of change.
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.
7. Not saving any money
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.
Summing This Up
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.
If you can beware of these 7 financial mistakes mentioned above it can lead you to more financial security.
You may be the savviest individual there is regarding your financial habits. We hope that you are, but if you are making any of these mistakes, be more focused, and remedy them quickly.
It takes a long time to recover from a financial crisis. So, prevention is better than cure.
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