Most of us don’t have an income problem. We have a spending problem, which is why even after winning the lottery, most people still end up being poor. If you don’t want to be like them, then by the end of this blog you will know exactly what not to do, because in this blog. we’re going to discuss 9 Money mistakes that you should avoid at all costs.
1. Having debt/Loan
That is when you spend money that belongs to someone else. As long as you don’t give them back their money, the more interest you have to pay them. Sounds silly right!!! so, why borrow money? Some people do it because they have genuine financial needs, but some do it because they want to imitate rich friends and showing off.
Having a Credit card is not bad. but, always use it whenever you need it, using them gives you reward points that allowed you access to the Airport lounge, free movie tickets, Spa, and most importantly increase your credit score, which can later help you taking loans. but if you did not pay credit card bills on time it can put you in a lot of trouble.
Here is the two-step solution to be debt-free.
(a) Plan to pay off any existing debt
Make a list of who all do you have to pay. Always follow the following rule about money –
50% of your income for your necessities 30% for savings and 20% for leisure.
But if you have any debt, repay it first before saving money. For Ex – if your credit card interest rate is 24% or your return on investment is 12%, then what is the point of investing because you’re still losing money.
(b) Create a monthly budget
Make another list, and write out how much you earn and your monthly expenses. If your expenses exceed your earnings, then see where you get can cut it down.
2. Not having Retirement fund
Start saving money for your retirement fund, as you got a job. After you take out all your necessities money, move some money from savings whatever is left to do retirement funds. Thanks to the power of compounding interest, the earlier in life you start doing this, the more you will have when you retire. And it doesn’t matter if Apple releases a new iPhone. Do not touch your retirement fund.
3. Investing in real estate
Real estate as an investment can be a headache because it is harder to maintain the property. you can’t get your money back easily because it takes time to sell or rent it, you can have low rental issues as well. You also have to pay for property tax, repairs and bear the cost of depreciation as well.
4. Not learning about the Stock Market
The people are waking up to the possibilities of making money in the stock market. The problem is, we are not doing it right. because we take tips from our friends for buying stocks. and so we do it without even understanding how the stock market works.
The stock market is a great place to generate long-term wealth. But before you click that buy button. Please learn the basics of the stock market and how does it make money. What is the difference between trading and investment, how to do a fundamental analysis of companies? So, start learning at least the basics of the Stock market before doing any investment.
5. Not having an emergency fund
Make your monthly budget and stick to it is a good thing. But COVID-19 has taught us that anybody can lose their job at any time, no matter how many years you’re working in a company. And that is where your emergency fund comes to your rescue.
An emergency fund is nothing but four to six months of your living expenses, which include your food, Rent, medicine, Wi-Fi expenses, etc saved in case of emergency, so that tomorrow if you lose your job. you have money to survive at that time.
6. Not having a side hustle/Income
Most of us don’t like our jobs. So, what are we doing about it? All of us need more money. so get online and find out how you could offer a service, be it as a graphic designer, video editor, content writer, logo designer, website developer, teacher, or whatever you like doing that can generate you some side income.
7. Still dependent on family
If you still depend on your parents for your monthly expenses or to lend you money to get you out of debt or even buying companies share in the stock market, then chances are you will never learn how to take care of your money. And if you do know how to take care of your money, you will always be considered a dependent.
8. Securing your loved once future
Not securing your loved ones’ future people in their 20s 30s or 40s think that they don’t need an insurance plan. But Covid-19 has taught us one thing is that life is unpredictable, and to be prepared for life.
There are two kinds of insurances that you can get
(a) Health insurance
It will handle all your medical emergencies expenses.
(b) Life insurance
It will handle your loved ones expenses after you died. Especially if you’re the sole breadwinner of the family.
9. Not investing in yourself
The only way to make more money is to invest in yourself. Investing in yourself will give you more returns than any company listed in nagging yourself means investing your time and money to build the skills you need so that you can find the work you love. Let’s assume you want to start a business as a side hustle, then you need to learn how to talk to people, negotiation skills, sales, web development, digital marketing, or even how to speak English fluently.
Do you think your customers will have the patience while you learn these skills on the job? Absolutely not, they’ll just take their business somewhere else to get online and figure out what are the best places to learn what you want to learn. For example – I want to learn scriptwriting, so I attended a scriptwriting and screenplay workshop. The more time and money you invest in upskilling yourself, the more ways you will find to make money, and the more money you can invest in upskilling yourself. This cycle is what makes people financially stable, so find stuff to join online courses. Instead of following fake or unrealistic news, watching gaming live stream for three hours, or participating in Twitter wars. Invest in yourself and start earning.
So, this are 9 Money mistakes that you should avoid to make your life easy…