7 Common Money Mistakes to Avoid (And their easy Solution)
Have you ever thought about your money leakage? You work hard to get the precious paycheck. At the end of the month, you scratch your head in confusion. You are not able to diagnose the money outflow.
Your self-confidence shatters in front of your eyes. There is no progress in your life. You start cursing your fate because you are not able to meet the demands of your family members.
Here is a list of 7 common money mistakes and their simple solutions.
Table of Contents
- You do not want to come out the vicious trap
- You start compare your paychecks with other colleagues
- You invest in latest technologies
- You invest in share markets without any prior knowledge
- You save your money in banks only
- You underestimate the importance of small things
- You don’t have financial goals
- Break your goals in three parts:
You do not want to come out the vicious trap
You put in lots of efforts by creating a wealth for your organization. But, are you creating a wealth for yourself? You wait for the next paycheck to fuel your family needs. Do you know the reason? You are playing a safe game. You don’t believe in creating wealth.
Stop looking money from a conservative angle. There is no need to follow a wait and pray approach. What will happen if the company fires you? What will happen if the company becomes bankrupt?
Before experiencing this dreadful situation, recognize the freedom and abundance of money. A wealthy person always looks at money with an abundant approach. A middle-class person is not able to come out the money trap.
In order to make more money, come out of the narrow-minded approach. Track your progress on a monthly, quarterly and annual basis. Instead of focusing on paychecks, concentrate on the value addition.
You start compare your paychecks with other colleagues
Some people have a bad habit of peeping into other’s life. They don’t work hard for increments. They work hard for having a better salary then their office mates or relatives. Instead of wasting your energy on these useless acts, you must concentrate on your skills.
In this way, you can save a lot of money by earning money for your quality services. You won’t be able to pay your bills or your retirement funds by looking at the progress of the other individuals.
You invest in latest technologies
How does it feel when you see the latest mobile phone in your friend’s hand? Are you feeling jealous about your co-worker’s new car? There is an urge to spend money on these eye-catching technologies, isn’t? You start collecting money from your saving fund. Some people take loans to satisfy the temporary pleasure.
Calm down and look things from a broader perspective. Before investing in these things, ask yourself one question: Do you really need them? Before jumping to grab these costly toys, wait for some time to analyze their utility and durability. Don’t spend your hard earned money by going with the trend only.
It’s very tempting to hear success stories of people investing in share markets. You find many people in your workplace providing half-baked information about the stocks. Then, you start investing your money on these stocks with the hope of doubling the income in few days. The stock market doesn’t work on luck principle.
It is not a gamble. It follows some rules and regulations. If you don’t have information about the company’s growth, take out some time to check the quarterly and annual reports. Don’t look yourself as a stock investor only.
Remember: By investing your money, you become the shareholder of that company. If you don’t have time to go through the company’s reports, it is always better to invest in mutual funds. The experts allocate your money in a proper manner.
You save your money in banks only
You can’t create wealth by saving your money in the banks only. The inflation rate doesn’t match the interest rate provided by the banks. Save a fractional amount of money in the banks for the emergency funds. Start consulting your financial planner for spreading your assets in a proper manner.
Take calculative risks. Invest some money in your interest areas. While doing your job, devote some time on your interest areas. After recognizing your passion, invest some money for the growth of your side business. You never know, you may leave your 9-5 job for your dream project. Always keep in mind: Money grows more when you love doing the work.
You underestimate the importance of small things
You go shopping without having the list. You prefer taxi cabs to public transit. You throw lavish weekend parties beyond your limit. You can’t control your daily outside eating habits. You pay bank fees for pulling out money from other ATM machines. You exceed your credit card limits. You don’t pay attention to all these small habits. They pose no problem individually. On a collective basis, they create a dent in your budget.
Always go with a list to stay away from unnecessary shopping. Choose public transport for saving your money. Don’t throw parties for show off. Avoid daily intake of outside food items. If you are feeling hungry, have some fruits. Remove your credit card numbers from your online accounts.
You don’t have financial goals
Are you spending your money without any future goals? If yes, you are in a big trouble. In order to come out this mess, you need to follow a strategic plan.
Break your goals in three parts:
I am giving some example to explain the meaning of these goals. Otherwise, goal making differs from person to person.
Short term goals: Reduce your debt by paying credit card bills
Medium term goals: Saving for your student’s college loan or your new house
Long term goals: Saving for your retirement to not become a liability in future.
Always ask three questions before making a goal
How much money do I need for achieving a particular goal?
Am I able to make the balance between current consumption and future savings?
Do I have any good backup plan?