Financial Blunders: Common Money Mistakes You Should Avoid
Financial literacy is effectively managing, saving, and investing money. It encompasses more than just refraining from impulsive spending. It involves a comprehensive understanding of how to protect and build wealth. This article aims to guide you against financial mistakes while emphasizing the importance of money management and preservation.
Financial Blunders: Common Money Mistakes You Should Avoid
After securing a job, some individuals may fall into the trap of overspending, buoyed by the belief that their income can cover any expenses.
While allocating funds for personal enjoyment is important to prevent burnout. It’s also essential to avoid mindless spending especially when there is inflation, which can easily lead to committing financial mistakes— or what we call in this article, money mistakes.
1. Not saving up emergency funds/money
Not saving money is a common mistake that leaves people short when they face unexpected expenses. It’s important to save even a small portion of your income in your bank account.
Moreover, our January 2023 article explored how saving money can be transformed into a fun ‘ipon challenge,’ customized to fit any budget. Doing this can help you accumulate savings even with only a penny. Over time, saving every penny can turn into enough savings that serve as a valuable resource during emergencies.
2. Having kids without financial preparedness
Sure, having your own bundle of joy sparks a different kind of happiness in you. However, let’s avoid jeopardizing our financial stability by embracing parenthood before we’re even financially prepared.
Moreover, the repercussions of financial unpreparedness extend beyond just yourself; they also affect the well-being of the child, subjecting them to unnecessary financial hardships. Let’s strive to create a comfortable life for ourselves, ensuring that we allocate sufficient funds for our future children to also experience its joys.
3. Having debts
I’ve come across stories of individuals resorting to borrowing money to finance wants, and hosting large gatherings. Considering it, after that gathering, a person will incur nothing but debt for a day of joy. It’s essential to adhere to spending within your means.
Debt can stem from factors beyond personal control, including low income, underemployment, health issues, emergencies, and various unforeseen circumstances, as highlighted by Norton Finance. Establishing emergency funds can help mitigate the impact of health-related setbacks. Furthermore, living within one’s means also serves as a preventative measure against debt resulting from low income.
4. Not differentiating needs from wants
Distinguishing between our wants and needs is a method to reduce our expenses. Consequently, if someone neglects this practice, their expenditures may become muddled, leading to overspending. Alternatively, they might recognize the distinction but find it challenging to apply it effectively.
Additionally, this approach can vary depending on individual circumstances. While it’s crucial to reward oneself for hard work by fulfilling desires, as I mentioned earlier, it’s vital to align spending with one’s financial capabilities. By prioritizing needs, one can maintain their lifestyle, allowing for occasional indulgences within a budget that can still allocate a portion for savings.
5. Not consulting a Financial Advisor
Not receiving enough financial guidance may result in the misallocation of funds— leaving you with no ample savings. Hence, let us put our money to good use by seeking assistance from financial consultants who can safeguard and grow your money. Additionally, insurance provides comprehensive coverage for health and hospitalization needs, guarding against costly health-related setbacks.
If you’re already employed, it’s important to reach out to trusted insurance companies to find equally reliable financial advisors to protect you and your family. By doing so, you can map out your long-term financial goals and receive tailored solutions to address any financial gaps you may have in case something happens.
In a time marked by persistent inflation, the Manila Bulletin emphasizes the importance of prioritizing our financial commitments. With systemic obstacles, it becomes important for citizens to exercise caution in their investment decisions. Drawing lessons from others’ mistakes allows us to strengthen our finances and make the right choice to protect our hard-earned savings.
