Life is full of financial pot holes. Even with the best of intentions, it’s easy to make financial mistakes. Rising levels of personal debt, the increasing cost of living and being able shop 24/7 on our smartphones means that it can be tempting to bury our heads in the sand when it comes to our cash and where it goes.
It’s easy to make financial mistakes, especially when we have so many things to juggle and distract us. It’s not just about the mistakes you’re making, but the opportunities you could be missing. The good news is that it’s never too late to learn how to avoid them!
Let’s look at 5 of the most common financial mistakes to avoid:
1. Going Without a Plan (or a Budget)
Failing to plan is planning to fail. One common mistake is failing to build a financial plan or budget. Even if you can comfortably afford your monthly expenses, it’s a good idea to set a budget for yourself. Having a budget means that you can keep track of where your money is going, and ensure that you spend it on the things that really matter and bring you pleasure. This will greatly limit the chances of impulse spending that you’ll regret later.
If you are finding it tough to make ends meet, a budget will show you where you can cut non-essential spending. Your financial plan is your road map to accomplish your financial goals. It’s about establishing SMART (specific, measurable, achievable, relevant, time-bound) goals and an investment and savings strategy to get you there.
How to make a budget:
List all your expenses. For instance, bills, rent, transportation, feeding, and more.
List all your income streams including salary, allowances, and other income streams
Remember to make sure that you budget for long term purchases .
2. Choosing Not to Invest in Your Future
Not putting your money to work is a huge financial mistake. The best way to meet long-term financial goals is with a smart investment strategy. The earlier you begin to invest, the better off you’ll be later. Invest in things that appreciate in value over time. Another good way to invest in yourself is by acquiring new skills. For instance, having certified Excel Skills will increase your earning potential by 12%! Why not start learning Excel today? CLICK HERE to Enroll Now.
3. Reluctance to Pursue Financial Education.
Financial literacy is an unclear area for many. It’s a topic that’s often overlooked in school, and overwhelming for those wanting to educate themselves. With no proper financial education or a clear path to follow, those with low financial literacy may not be well equipped to make decisions related to essential personal finance choices like saving, investing, credit, debt, and more. Unfortunately, most Africans fall into this worrisome category. To become financially literate, you can start by taking an online course on the subject. You could also read a book such as "Rich Dad, Poor Dad" by Robert Kiyosaki, which we highly recommend for those just starting.
4. Making Major Purchases without Comparing Prices and Quality
Whenever you’re purchasing items, especially expensive ones, it’s best to do your research and compare prices so that you’ll know whether or not you are getting the best product at the best price. Of course, that’s easier said than done; even if you’re just comparing items between the biggest online stores. Consumers who review their accounts before renewing and comparing shop can often save hundreds of XAF per year! Even if you stick with the same company, review your prices to see if you’re paying more than necessary.
5. Letting Your Credit Report Go Unmonitored
Credit monitoring is an essential aspect of financial hygiene. Seeing your credit report can help you to visualize your overall financial health and help you to prioritize payments if your income is fluctuating. Hopefully, you’re aware of all the credit accounts you currently have open and are staying on top of their respective balances and payments. The only way to see all of this information in one place is by monitoring your credit. Even if you’re careful with your credit, it’s important to regularly monitor your credit reports to ensure that you’re responsible for all the items on them.
It’s easy to think that you’ve got things handled, but by learning more about financial literacy and best practices, you could avoid many financial mistakes and find your path to financial well-being. You’re already doing so by reading this and we’re so glad that you’re here and taking steps to learn. To learn more about how to stop wasting your money, read THIS article.
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