Financial Mistakes: Most Common Ones Not to Repeat
Have you ever had some cash let’s say $100 and then after a week it ‘disappears’? I’m not talking about magic here. What I’m talking about is that you used them carelessly without any profit gained. That was an example of a financial mistake.
There are stories of famous people around the world who were once rich but after a while, they are reported to be bankrupt. I won’t mention anyone, but I guess you have one individual in mind. Those situations are caused by financial mistakes.
So, how can you identify these mistakes? Cool question. Lets’ find out.
Common Financial Mistakes That Make You Unsuccessful
Borrowing the Wrong Types of Loans
Some situations might force us to borrow loans once in a while. But which loans do you borrow? If you need urgent loans, there are some great cash loans wired in 1 hour. Please note the word GREAT. Don’t borrow loans anyhow.
Research on loans with best interest rates, borrowing, and repayment terms. Even if you are in bad credit, you can still look for lenders with fair terms. Before you get into this situation, we need to look at the next financial mistake.
A 2019 report from CNBC indicated that consumers overspend about $7,400 each year. That is a huge amount. This problem often occurs among the youths. You go to a certain shopping mall, see some cool shoes or necklaces and buy it without a plan. You later see a nice street snack and you are like “Wow, I must eat this.”
If you are not careful you may end up in unnecessary debts that are hard to get out of. Have a plan before buying anything. How will you do this? That’s where the subsequent financial mistake comes in.
Lacking a Budget
Are you the kind of guy who gets the salary and just buys staff randomly just because you need them? Aaaah, let me not lie…. You are in big financial trouble if you do this. Randomly buying things without a plan is the synonym of overspending. You’ll end up spending more than you are earning. How about randomly taking food away from home? Just look at this data of Consumer Price Index in this categogy.
To correct your mistake, try this special magic. Create a budget. But how will you do this? Use the 50/30/20 rule where you allocate 50% of your income to your needs, 30% to your wants, and 20% to your savings. It’s simple as that. If this does not work out for you, research other budgeting methods to use.
All in all, make sure you have a well-made budget.
Not Following a Budget
What’s the use of having two eyes if you can only see with one? Wait, I messed up. That is not a good example. Let me look for another one. What’s the use of having a blender if you eat raw fruits? Does that make sense? I hope it does, huh.
In short, what’s the use of having a budget if you don’t intend to follow it? Still, if you don’t have a budget, you are bound to fail terribly in your financial life. So, you need to have a budget that you’ll follow.
To achieve this, try not to be too hard on yourself. That means you should allocate some money for entertainment, eating out, and travel. Just make sure that these expenses are within your income level.
So, your friends are driving a Ferrari while you are driving a Chevrolet Spark car? “That’s horrible. You should aim to buy a Ferrari like theirs.” Is that what you are thinking? Then you are in big financial trouble if you think like that.
Instead, why don’t you think like this? “My friends are debt-free. I should probably be like them.” This is a very good thought that will motivate you to get out of the debt rather than thinking of buying a Ferrari that you can’t afford.
Stop impressing others. Live within your means. If you set goals, set them because you really want to achieve them rather than because other people are doing it.
Ignoring Your Credit Scores And Reports
As I mentioned earlier, everybody needs a loan sometimes. To get the best interests plus other terms, you need a good credit score of above 700. Having a bad credit score can even lead to loan rejection. So, if you want great loan terms, go get your report from one of the three credit bureaus and look for possible errors.
If there are no errors and your credit score is still low, work on improving it. It could be starting to pay your installments in time, fully paying all your loans, or consolidating them into one loan.
Investing in the Wrong Assets
You may have heard from experts that you need to invest to increase your income. But this investment can be tricky. Ever heard of gambling. Yep, it can be a great way to get rich so quickly but let’s face the fact.
Try naming some of the richest people globally. Well, let me name mine. There is Elon Musk, Jeff Bezos, Mark Zuckerberg, Oprah Winfrey, and many more. Among these rich people, have you heard that their source of income is gambling? I don’t think so.
Let’s take another example. Let’s say you are in a dilemma between buying land and a car. What do you think you should invest in first? The land is a great asset. The price is bound to increase in the future and it can lead to another source of income in farming or building business enterprises.
How about a car? It’s also great but it will lead to further expenses like fuel, maintenance, and on. Its value is also bound to decrease in the future. The land also has expenses but the gains cannot be compared to that of a car. This shows that a lot of critical thinking and research needs to be done before investing in anything.
Financial mistakes can take you from being a well-known rich guy to a very poor person with debts all over. So, to avoid cases like this, it’s important to identify some of the financial mistakes you do and try to avoid them.