Do you ever think about the most common financial mistakes we make? While it frequently seems that the money we receive per month, including real estate we own is the best mark of our financial condition, our real financial condition is really the sum of all monetary choices we have made during our lives.
Often, we have good intentions when making those choices, yet they can occasionally end up being extremely off-base. Additionally, in later years, many individuals lament the absence of assurance to take their finances and plan for the future more determinedly.
Specialists for finances bring up that the vast majority, despite their income, regularly make the similar or same errors when making finance choices.
They spend money on unnecessary things and do not plan a budget
Majority of people have no genuine control over their month-to-month spending and frequently spend more than they really should. What may not appear as though a major cost from the start can have more serious consequences on our monetary condition eventually.
Superfluous costs are difficult to eliminate since they become a propensity after some time and we unknowingly stop thinking what we are really purchasing and paying for.
These expenses come not only from often visits to the supermarket or mall where we spend more than we thought, but also from expensive outings, trips around town, mobile phone bills, and other costs that we often do not consider.
In order to solve this problem one has to create a monthly spending plan and allocate money properly. Budgeting experts advise you to work out each month how much money you need for basic living expenses like utilities and groceries, and add to the budget how much money you can spend on things you do not need.
In addition to the monthly spending plan, it’s best to make notes of any extra or sudden expenses so you have a complete picture of where your money is going at the end of the month.
You have no fund for “black days”
Many people live “paycheck to paycheck” these days, so any unexpected monthly expense can throw them into new obligations. Although we know that saving money is not easy, the so-called “black days fund” can save us in such situations. Whether it’s a car breakdown, house repairs or something more serious like loss of a job, you will sleep much more soundly knowing you will not have to borrow that much-needed money.
Financial experts usually recommend saving for this fund until the amount saved is enough to cover six months of living expenses.
You do not invest in business ideas and you do not look for additional sources of revenue
In spite of the fact that you should not ‘rush’ into business ventures, many individuals never decide to invest their money in business because of the fear they will lose it. However, with great preparation and market surveys, this venture can turn out into something really good.
If you are not sure where and how to invest money, you should seek the help of a financial expert and start first with an investment that you can afford without debt.
We should value and enjoy our free time at all times, but do not turn down the opportunity to have an additional source of income alongside your work.
If you believe in your idea or skill or simply you want to try new job, start today. An additional income can become a full time job you always wanted and be an important for your financial situation.
You do not pay for life insurance
Many people regularly purchase health and auto insurance, but it’s much harder to opt for life insurance, even though it’s one of the most reliable ways to save for the future.
The usual reason for avoiding this decision is not only the question of our finances, but also psychological, since in this type of situation we are overthinking everything. Specialists call attention to all those negative thoughts going through your head which are in this situation quite normal, however that life insurance really gives replies to your concerns and builds your personal satisfaction.
What many people should be thinking about life insurance today is the fact that the expected retirement amounts are getting smaller and smaller, and the money insured can be used to supplement your budget later in life.
With life insurance, you are protecting yourself and your family, and it is in fact a long-term savings for the future and all the unexpected situations that we encounter in life. Life insurance should never be seen as just another additional expense we have, but as an investment in a secure and worry-free life.
They do not plan according to age
According to research, many people do not plan their finances according to their age, so they often run into big financial problems later in life.
Specialists in this filed emphasize that in your twenties, most money should be invested in school, education and learning business skills, i.e. yourself as a human resource, while in your thirties, more should be invested in business plans, ideas, career advancement and possibly starting your own business.
Investing time and money intelligently in your younger years can make financial planning much easier in your forties and fifties, when many people face the higher costs of raising a child or caring for parents who will already be in their old age.
They buy real estate and cars they cannot afford to buy
Every year, millions of new cars with high price are sold around the world that most owners cannot in fact afford. Expensive cars tend to be expensive to maintain, and as new models are released, their value drops rapidly.
The same thing happens with cheaper cars, of course, but our financial losses are not as worrisome in this case. The financial experts’ answer to this question is simple: your ideal car is one that you can afford without having to take out a loan.
Moreover, most people make similar mistakes when they buy an apartment or build a house. Even though you will probably need a loan for this type of investment these days, you should consider how big house or apartment you need and how many years it will take you to pay off all the money.
One should take into the consideration the cost of maintaining a big house or apartment. So, if you do not have a big family then you should look for smaller apartment or house where the debt will be smaller.
No matter how old you are today, managing your finances is the key to your future. That’s exactly why we developed Invoice Crowd. Invoice Crowd simplifies invoicing, expense tracking and accounting, saving you time and money. Generate a professional invoice in a matter of seconds. Just one click away.