7 Money Management Mistakes You Must avoid
Earning money is hard, and managing money is even harder. For a start, you must identify the common money management mistakes that people do so that you can learn from them. These are 7 of the most common mistakes to avoid in managing your hard-earned money.
Mistake # 1 : Fail to plan
If you ask the people around you, for sure you will find many who have no financial plan. The reason given usually "I'm so busy with work and family that I have no time manage my finances". This indifferent attitude will affect your financial standing, you will always pay high taxes, stick with non performing investment or not wise in choosing investment / finance products that suit you. With many workloads, many of us don't give priority to money management and let situations ruin our finances.
Actually, even if you only belong to the middle income group, FINANCIAL PLANNING habits will enable you successfully accumulate wealth in the future.
Mistake # 2 : Overspending
Everyday on TV ads, newspapers and many shopping complexes promote the luxury lifestyle. Latest mobile phone models, luxury cars and also latest fashion prompted many of us to spend beyond our means. What's more, people are willing to spend money just to go along with the latest fads. As a result, after deducting home and car loans, credit card payments, bills and so on, you have very little balance in the bank account at the end of the month.
Mistake # 3 : Delaying saving for retirement
If we are to keep our existing lifestyle after retirement, we must ensure that we save enough money to cover all the the expenses at that stage in life. However, many of us who are close to retirement are still struggling to achieve the required savings. To prepare for retirement, our monthly savings should be increased whenever our salary goes up. However, what usually happens is just the opposite; we increase our spending -on home improvements, a new car, some club members to compete with friends and neighbors.
Mistake # 4 : Spend using credit cards
Spend first and pay later, is the norm today. Many of us who have more than one cards. Sure credit cards are a convenience, but a lot of people abuse it and assume it is a tool to spend indiscriminately. We overspend, pay minimum payment each month and feel good as if they've already paid the debt off. We do not realize that credit card debt will become very very big, fast. The reality is the percentage of people filing for bankruptcy has increased in recent years, especially among young people due to credit card debts. Don't become a victim of your credit cards.
Mistake # 5 : Invest in poor investment products
There are a variety of investment products in the market. To make sure you invest in investment products that meet the your risk and reward profile, you need knowledge about the intricacies of investment. Do not rely solely on the words of financial advisers simply because some of them have their own agenda. Sometimes there are unscrupulous financial advisors that provide inaccurate information just to increase their sales commission. Be sure to examine the characteristics of an investment product and review its management team before investing .
Mistake # 6 : No insurance and savings for emergencies
Some people still think that buying insurance is a waste of money. But did you know that without insurance, our financial position will be affected, especially if we lose income / employment? The situation would be even more unfortunate if people who lost income is the chief breadwinner in the family. Without insurance or savings, the whole family will suffer, and by then it is already too late to think of finding other sources of immediate income.
Mistake # 7 : Obsessed with money
The above discussed about the need for good financial planning. However, in developing good financial habits, don't be obsessed with accumulation of wealth that you forget everything else that is meaningful in your life such as family, religion, health, career satisfaction and friends. Without it, life would not have any meaning even if you have tons of money.
Finally, we should always remind ourselves of the importance of financial planning. If we do not persevere in building wealth and fail to managing well, wealth likely will not favor us.