It is certainly that most of us are mainly working hard to generate an income and earn money for the sake of sustaining a pleasant life not only for ourselves but also for our families. Nevertheless, making smart choices with our money can be strenuous yet challenging. This is because, when it comes to managing our money, we tend to fumble around without proper plans and wise decisions. In the end, we do not realize that we actually make financial mistakes and these mistakes can be quite pricy and have repercussions on our financial futures.
Let’s have a look at some of the most common financial mistakes that can often lead individuals to more major financial problems. Being aware of these common mistakes can help us to make better decisions and be more responsible on our finances during any pitfalls and circumstances that we may face in life.
1. Not paying so much attention on budgeting
Most of the times, the most common financial mistake that people tend to make is that they do not concern about their finances. For instance, spending or going without a budget. No matter how much money we make, it is crucial for us to make a budget by considering costs such as utilities, loans, food and others. At least by reviewing our monthly spending and payments, we can keep track to responsibly plan for the future. If we don’t do this once in a while, we are likely to experience over budget and never get ahead in life financially.
2. Forget about how to reduce debts
With the hassle of our daily activities in life, we may tend to forget about how to diminish our various debts. Mortgages, credit card debt and personal loans that we carry around with us everywhere can drag us down financially if we do not know how to manage them appropriately. One of the ways to avoid being in a lot of debts is to develop a debt payoff plan, and of course sticking to it is crucial. For instance, by knowing the interest rates of our loans and how much we spend on debt payments can lead us to handle our debts wisely and make smart decisions.
3. Spending more with credit cards
It is not harmful if we want to use our credit cards once in a while when going out for shopping. However, it is better to use cash whenever we want to purchase something. Even though using credit cards may seem easier and allows us to pay things in advance, but do be careful as we may fall into a massive debt. The worst scenario is if we are the ones who don’t know how to deal with credit cards effectively and tend to forget about paying off our credit card balances every month. Thus, the best strategy is to never spend more with credit cards. Suffice to say, if we learn how to shop with cash, we can protect ourselves from impulse buying and we won’t confront the possibility of getting into debt easily.
4. Make a hasty decision
Whenever we shop, it is important for us to think carefully rather than making a hasty decision when purchasing things. We certainly don’t want to end up buying things that will only waste our money and spending on unnecessary things. The best way that we should do indeed is to focus on what we really need rather than on what we really want.
5. Do not have a proper financial plan with your spouse or life partner
There is no doubt that the hustle and bustle of daily life can keep you and your partner busy and forget about the financial plan for the family. The key is to track your family expenses and spending regularly and have frequent discussions about financial goals. These strategies can help you and your partner achieve those goals smoothly where you both share budget problems and find the best ways to manage finances for the betterment of financial future.
6. Do not save enough
Lack of saving is another common money mistake that we may tend to make. Whatever amount of money that we earn or make, we must allocate a certain amount of money for savings. If we do not save enough, then we’ll likely to depend on credit to make ends meet. Hence, we need to always remember to put aside a portion of our monthly earning so that we can be more prepared for unexpected expenses and emergencies which in this way can save us from getting overdrawn and broke.
7. Ignoring the fun
Though at times we might feel worried about our expenses and other financial issues, we also need to be aware that we also need to set aside some money for entertainment and fun time with our loved ones, family and even friends. We deserve to have fun every now and then. If we are afraid that we might overspend on fun aspects such as holiday and travel, all we have to do is just making sure that we truly know our financial responsibility and stick to our budget appropriately.
8. Not seeking for a professional advice
Apart from getting advice from our family members or a trusted friend about financial management, we can also seek for a professional advice that can help us go through in times our financial crisis such as a financial planner. By sharing our financial matters or doubts with a financial planner, we will be able to learn on how to make smart money choices, budgeting and achieve better financial outcomes.
Now that we have been reminded about these common financial mistakes, we have much better chance of gaining success towards financial freedom and hopefully we will be more careful when making proper choices on what we spend every day.