Updated: Jan 5
What are the most common mistakes which people usually make? Would you like to be financially stress free? Do you want to change your life for the better? Money is a very sensitive subject which many people don’t like to talk about. Reason is because the majority of the people feel that they don’t have control over it and they prefer to earn and spend it instead of saving it and/or investing it. In this post I will go through different kinds of finance mistakes and what to do to avoid them and become a more resilient person. Let’s go through them now:
Starting with emotional spending can be one of the main reasons why people spend more than they can afford without thinking twice about it. A good way to control emotional impulsive shopping is to ask yourself the 3 questions below:
Do I need it?
Can I really afford it?
Will this bring more clutter to my home?
By thinking carefully about your choices you can really avoid doing things in the spirit of the moment. But personally I believe that the most efficient way to not fall into the trap of emotional spending is not to buy things straight away but instead to wait for a couple of days and if you still want them then it’s more likely that you really want it and possibly need it.
Check out the post “ Great tips on how to declutter and organise your space fast “
Not investing wisely
There’s a huge misconception about investing where people believe that it’s reserved only for the elite people but that is definitely not the case. But the one thing which is certain is that you need to consider doing your research properly before investing, especially if you are new to the industry. To add, don't spend more than 5 to 10% on one investment and don’t go for any investment you don’t fully understand. I would personally invest a small percentage on different ones than investing a huge sum on only one investment. Don’t rush, make sure it’s the right one for you and always have at least 6 months worth of living expenses in a liquid savings account.
Not having a budget planner
This will help you to adequately manage money, take full control over your finances and create financial stability. It’s important to be realistic and to not expect too much from yourself, you need to be self-disciplined and save as much as you can but at the same time put some money aside to invest on education, experiences, or entertainment. This is something that I can personally say made a significant difference in the way I organise my finances and also it kind of made me a stronger person. What I mean by that is that sometimes it can be daunting to see what you’re actually spending money on a weekly basis and how much more you could save by avoiding buying unnecessary items.
Not having an emergency account
Having an emergency fund gives you a peace of mind because it will take the pressure off in paying some unexpected expenses and avoiding putting yourself into debts or more debts. It’s important to have some money set aside to pay for unpredictable bills, expenses or just unfortunate events such as losing a job, pet emergency, illness, house or car repair and so much more! Most importantly is that having an emergency account is a way to look after your health as you can avoid unwanted stress in your life which can impact your well-being.
Not using credit cards wisely
Credit Cards are a brilliant way to build up your credit and when it is needed is a brilliant emergency fund back up plan. Even though there are some really good benefits if not used wisely a credit card can put you into debt. I personally use my credit card every month but I pay off the full balance every single month. I use it to mainly build up my credit so when the time comes to remortgage I stand a better chance to get a good offer. To add, if you pay the full balance every month you’re not only paying no interest but you’re also avoiding late payments and incurring awful charges!
Not saving a small amount of money
Is it worth saving even only £100 or less? The answer is “yes”. Of course saving a little is better than nothing. Even only £50 of constant saving can turn out to be thousands of pounds which you can eventually invest in stocks, in a long term saving account, buying a house etc. It’s always advised to save less money than to save lots and then give up and spend it all at once. The reason why that may happen is because it’s good to save but you also need to keep some money for entertainment, travelling or anything else that you enjoy doing. We are humans not robots and we need to be rewarded every now and then for the harder work.
Getting a loan, use a credit card or add a purchase to credit
Many people rely on their credit cards or a loan because they believe that their income is not enough to sustain a living. Even in some rare cases this may not be the reason, many of us use that as an excuse to buy clothes, jewellery, gadgets and anything else which is not really necessary. Don’t get me wrong, every now and then everyone needs to treat themselves but you should not really spend money that you don’t have. Also credit cards and loans have very high interests which you want to avoid paying.
Lending or giving money to people which you don’t really have
This is something that I did myself for years and the main reason was because I could not say “no” as I felt guilty or bad about it if I did not help. That doesn’t mean that you need to be greedy and keep all your money for yourself but it means that you only help others if you are in a financially stable position. I put myself into a lot of debt in the past to lend or give money to family and friends and it’s only until I felt the weight of my debts and the negative effect that had on my credit that I stopped. Say “no” it makes you not just a more resilient person but you feel in control of your life. I understand that life is full of unexpected events and sometimes people don’t have any other choice than to rely on family and friends but if you can always try to avoid it as that might bring more stress to your life.
Check out the post “Effective habits on how to become a mentally stronger person”
Not drawing attention to your value as an employee
It's a fact that not many people take in consideration but this is another way to not only resolve your money problems but also is a quicker way to boost your savings. So in order to achieve that you’ll need to have a list of evidence ready that proves what you are worth. You’ll also need to do your research to find out what the market is paying for someone with your skills and level of experience. Keep in mind that you’ll definitely need to look at different resources to determine your expected salary.
I hope that you found this post helpful and if you would like to ask some questions, share your own experience, or just leave a short comment down below, I would love to hear from you. Also don't forget to Subscribe if you don't want to miss any future posts and have free access to premium content!
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