Many a times, we splurge over and above our means, live on borrowed money and make countless other mistakes that could hamper our finances in the long run. Here are the six most common financial mistakes that people may possibly make this year.
There’s a tendency to spend beyond our financial means and is a very common financial mistake. It could be for reasons to impress or simply out of careless, frivolous motives. How many times have we taken up that gym membership that we hardly use, spent money on expensive clothes that aren’t worn regularly or just splurged on magazine subscriptions? Even the petty expenses count. If you are enduring financial hardships, you need to quit the habit of splurging all your money on things that you don’t require right away, because every penny matters.
Not Saving Up
If you put expenditure ahead of savings, you know there is something drastically wrong with the equation. Don’t get into a situation where you are living pay check to pay check. Even if you aren’t taking any proactive steps to manage your money, it would be prudent to keep months’ worth of salary in your accounts because you may just need the finance for emergencies. Saving up is a good practice for the future and could help you breeze through difficult situations that you may be facing currently.
Procrastinating Budgeting & Planning
Charting out a budget could be a tiresome, Herculean process. Nonetheless, your future depends on how you manage your finances now. Spend some time to plan your expenses for the following, weeks, months and then the rest of the year. Make allotments for that dream car, monthly expenses, investments, your emergency funds and keep in mind if you have any liabilities or debts you need to pay off. Making a budget will prepare you for any financial or economic outcome in the future and help you plan your expenses better.
Everyone knows the pitfalls of being underinsured or not having insurance at all. But a lesser known fact is that being over-insured is a being no-no. Being over-insured means you’re paying for more cover than you need, which could in-turn lead to excess monthly payments from your account, for no good reason at all. Sometimes, your bank covers insurance for you and people aren’t even aware that they are insured as an extra service by the bank. Be careful. Insuring yourself and your family is a good practice but too much of anything could prove to be detrimental.
Making monthly contributions to a couple of retirement accounts is essential for a smooth retirement. Take risks and invest. Not investing in the right spaces or investing enough is a very common financial mistake. You may have a hard time trusting other people or you may have even find that the markets are risky. If that is the case, hire a financial advisor who will understand your financial goals and help your investments grow.
Bypassing Other Income Opportunities
Many people get comfortable with the idea of sticking to their current jobs because they are well within their comfort zones. Contrary to popular belief, this is a very common financial mistake. If with time, you have discovered another opportunity for some additional income, have some spare time on your hands and boast-worthy skill sets, why not put yourself out into the market and earn a little more? There’s no harm in being ambitious and it would be wise to remember that it’s never too late to try something new.