Some of the Most Common Financial Mistakes People Regret are sometimes the simple things.
Millions of people face financial problems because they have not trained themselves to have good money habits. Good money habits are usually not taught in school. It takes careful consideration to keep from making common financial mistakes people regret.
While we learn about history and geography (which most of us will never use), personal finance which is highly important is not taught. This is one purpose for posting about some of the common financial mistakes people regret.
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.
Below you’ll find some of the most common financial mistakes people regret and realize the impact often too late to do anything about it. Avoid them at all costs.
Overspending
This is probably the biggest one of all. There’s a saying – cut one’s coat according to one’s cloth. It basically means that you should live within your means. However, many of the rich and famous, live below their means. If you want to be richer…spend only when you “really” need something. Not when it strikes your attention as being a good purchase.
Yes, it is easy to listen to the next ad on TV and think the product advertised might be something you want. However, was it something that will help your life significantly? In many cases, the answer is no, and then that item may call for another one and each adds to the debt.
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. It is easy to pull out a credit card when you realize that you do not have sufficient cash in your wallet.
The mind must be taught that it is better to have more in the bank, than those things that bring gratification. It does not matter what the neighbors have.
Solution:
- Make a budget and stick to it.
- Take responsibility for your actions, and hold yourself to it.
- List everything that you have spent money on, are currently spending money on, or might spend money on. Is each of these items a necessity, and do they benefit you and/or your family?
- If you really want to have a money mindset, it is important to refrain from overspending on things that are of little or no true benefit to you or your family.
- Stop trying to impress other people. No one else cares if you have $100 or $1Million dollars in the bank. Many people are out to have a good time and allow other people to think they are more wealthy than they are. If you want to have a future of financial success, put your extra money in a safe haven and leave it there to draw whatever interest is available.
- Learn to be frugal. Being frugal is not being without. It is a technique to help you save on what you need the most. Buying what you think is the best quality of all things may be important. However, if another product has the same material, ingredients, etc., and does not have anything negative therein, is probably just as good.
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. The insurance on the car is higher than an older model and here we go again.
Dave Ramsey states that you should never purchase a brand new car unless you have a million dollars saved. Every item you purchase on emotions will probably, in the end, if actions do not change, bring a lot of regrets.
With my experience in mortgage lending, I have seen the good, the bad, and the ugly. Because I have seen borrowers who want a new home and yes, they deserve one, yet they have not maintained their debt load sufficiently to afford one.
Solution:
- Most advertisements are out to get you, one way or the other. That is why companies advertise. It is to get your attention.
- Always check the recommendations from other buyers, check out ratings, and remember the next ad will be just as highly recommended.
- Remember your budget, do you actually need whatever the ad was about? Will it affect a future purchase that you might need?
Using Credit Cards For Everything
This is one of the most common financial mistakes that people regret. More people go 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.
It is somewhat a gimmick and should be avoided unless you are going to transfer one card account to another to lower the interest rate. The card being transferred should be torn up and discarded.
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. Most people get new offers in the mail weekly.
Solution:
- Remember that paying cash for most things will help you not to spend as much. Think about your budget.
- When you go shopping leave the credit cards at home.
- While compiling your budget, make sure you are holding sufficient cash to buy that burger once a week. Those little food purchases add up, and the cooked meals are much better nourishment than the bought burger.
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.
Solution:
- Nine times out of ten, there is no way to get rich quickly. It doesn’t matter how good something sounds, you should remember to check out references first. Not, just one, but several.
- Building wealth, income, and growing it to a substantial level, take a lot of work. Trail and error, and it does not work the same for everyone.
- Believe that!!!
Failing to Plan For Retirement
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.
This mistake is also one of the most important common financial mistakes people regret. Why?
You are going to age if you exist. When you do not have money coming in each month from a job, you have to use retirement, Social Security, or savings. If you have not saved adequately, and expenses mount up, you can be in trouble.
Appliances still ware out. The oven can stop working. The house may need repairs. There can be many unexpected things to occur. You need to have sufficient retirement, savings coming in. Social Security is not enough.
Solution:
- It is probably time for a little self-reflection and to think that regardless of age, you will become retirement age at some point. It is important not to put it off too long. If you being early in life and make a habit of saving, when you are old you will enjoy the benefits of being financially savvy when young.
- One of the best formats to save for retirement is investing in the company 401K plan if there is one. Most companies will match your contributions by a certain percentage. This is free money, yes you earn the favor by hard work, but if you do not invest yourself, you will not have the added compensation.
- If your employer does not have a retirement savings plan, go to your bank and they can set up a retirement saving plan that will meet your financial capacity and needs. If not they will recommend one, however, most banks can meet your need for retirement savings.
- Secondly-you can also choose a Roth IRA and start one with your banking institution.
- Take into consideration all of the above and pay yourself money each month for your future. This is also important should life hit you with an unexpected occurrence. The money is there for an emergency.
Not Trying To Move Up The Ladder * this one is not always easy we admit
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 overtime doesn’t really increase that much and they’re always living from paycheck to paycheck.
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.
Solution:
- A certain mindset is necessary for seeking a new job, salary increase, or promotion. Hard work is absolutely necessary as well.
- Being efficient on the job usually gets noticed by those in management.
- Emotional Intelligence is important to get a promotion or get hired for management positions. It has been determined that in many cases EQ is just as important for management positions as IG.
- Self-confidence is necessary to head up the ladder. You must believe in “you,” and your abilities.
- It is important to have integrity and be willing to work for what you want, and never downgrade another human in the process.
Not Saving Anything For That Rainy Day
This is one of the most important habits in life. A common mistake some 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 if at all possible.
Solution:
- Always save a portion of all that you earn for emergencies.
- When making your budget, pay yourself something to make your emergency account grow. It does not have to be large about, however, it should be a required amount.
- This again is a mindset of financial security. You never know when the rainy day will come. Life brings unexpected challenges sometimes.
- Deny yourself that weekly McDonald’s hamburger and put it into saving so that you are covered in case something happens.
- 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.
EndNote:
These mistakes mentioned above can lead one to financial ruin if they’re not addressed. You are more than likely aware of these mistakes, so check and see if any exist in your life and remedy them quickly. It takes a long time to recover from a financial catastrophe. So, prevention is better than cure.
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