Every person has their own way of handling the money they possess. Some people are able to save some of the funds on banks for those emergency situations, while others spend it all in one go and remain broke.
Considering these trends with handling money, everyone would say that it takes a lot of commitment and motivation to be financially secure. Spending is very easy to do and it is difficult to resist, especially if the thing you are looking at or the thing you intend to pay is something you don’t need immediately.
Want to know how you can prevent your money from running away from you? Here are the 8 most common and dangerous money mistakes a person could make and not sort out at all:
#1 No Budget
One of the most common mistakes a person could make is not having a sound budget to enable them to organize how they can fund their expenses and put some on the bank. There would be cases your budget mostly goes towards your desires, rather than your actual expenses.
You can use a mobile app designed to monitor your budget and help you determine where your money should go and how to save it.
#2 Spending Everything
This money mistake is a major problem for many people, especially when their desires get the best of them. When you have the funds with you, you are tempted to spend it all without even leaving some money as backup or savings.
It is important you leave some money in your savings in case there is an emergency that would require funding. You should also have a financial goal in life which you wish to achieve and use it to serve as your motivator to begin saving money.
#3 No Retirement Savings
For some adults, especially those who have retired, their biggest regret is not saving when they were young so they do not have to worry about funds for their medicine and other needs. When they were still working, they did not consider opening a retirement fund which they can fall back to when they are older and can no longer work.
It is important that young workers today start saving for retirement while their income is still stable because once you retire, you no longer have a stable source of income that you can use for your needs. However, even if you do have company retirement plans, it may not be enough for your needs.
#4 Only have one source of income
A notable mistake for many younger workers today is only focusing on one source of income. With goods and services increase in price regularly, it is important that you have a second or third source of income in case your main source of income suddenly grows cold. Having a backup fund would also help you save up money much faster, and also have funds available for future investment.
#5 Keeping up the trends
Every season, there is something new being released. However, if you plan to have these new items, you will have to contend high prices and each time there’s an update, you will need to buy a new one. Doing this trend would only get you into deep debt and even get you in deep trouble.
Following the trend may also not be applicable to your lifestyles and it will not make you happier.
#6 Has no distinction between needs and wants
For some people, they cannot discern when to spend and when not to spend. Even if they are in a financial bind, they would still spend without reason even if there is something more pressing to support and finance.
It is important that you have an idea of what your immediate and essential needs are and what you want but not needed immediately. Knowing this would help you remove your “wants” from your monthly expenses and focus on your “needs.” It can also save you in the long run because as you slowly pay off your “needs” or immediate debts, you can use the money you used to use for these expenses for savings and future investment.
#7 No clear plans to get rid of student loan debts
For students who took out student loans to pay for their education, it is a common mistake for them not to learn about their student loans and how to pay it efficiently.
If you do plan to pay your student loan debts, make sure you research first which moneylenders can help you through personal loans. You can also check-up grants or scholarships, as well as looking into a day job to support you throughout the school.
#8 No future life plans
If you are planning to start a new life with your chosen partner and starting a family, it is ideal that you only do this when you are financially secure. Having a child, for instance, would require a lot of money and a huge responsibility as they grow up.
You can get a personal loan from a moneylender to fund your wedding or your wife’s pregnancy. However, you do need to plan your budget properly so you do not be under a lot of pressure due to debts.
#9 Unscheduled Replacements
Finally, it is also a major money mistake a person can make is by replacing appliances or furniture even if it is not time to get a replacement and if you do not have it on the budget list. If you force yourself to upgrade, it will prevent you from saving up for the important stuff.
Financial independence and security are not difficult to attain contrary to what many people perceive. You only need to sit down, sort your priorities and focus on your saving goals to be on the right track to saving and preparing right. If you stick with your financial plans, you can free yourself from the burden brought by debts and poor financial planning.
So, start thinking about the future and start dealing with your financial troubles today!