05/11/2020
Many of us have made these common money mistakes. But aren't lessons are learned from mistakes? Now, to those who're just about to step out to the society, or whoever that wants to improve their financial status, make sure to avoid these !
1. Quite often, we're not aware of our mid term expenses(outside of a month time, but happening in the near future), such as holidays are coming - are we buying gifts for family & friends? Car maintenance fees, etc It's important to frequently look ahead and ask yourself , What is coming up in my life and plan ahead to make sure you're prepared for any expenses that might come up so your everyday life can run smoothy.
2. Needless to say, emergency funds are fundamental! Have enough of emergency funds that you're able to take a punch, before your start paying off debts or even start investing! My advice is that the NO1 goal to establish a financial base is to ensure you have some cash on hands for you to use when something goes wrong or you weren't expecting it. ( How much is enough varies from your cost of living. The rule of thumb is 6months of your expenses - how much do you need to maintain a minimum standard of living)
Only after you have this established then you'll start accelerating your debt payments / start investing. Whatever it may be.
3. Making big decisions without running the what-if analysis can be very dangerous. Did you ask yourself questions like, what would happen if I bought a new car? Change a new job? A lot of people jump into the big decisions without looking at the numbers that run their financial life. It is vital to have develop a habit to keep your financial data/spreadsheet and track them for you to run the what-if analysis.
4. Carrying credit card balance is a big No NO. Remember to pay off your balance in full every single month cause they charge a very high interest rate which may get you into trouble very fast!
5. How do you build a good credit history and why is it important? Most of you may not know, Many of the basic things in life use this as a trust indicator. Can you borrow money and be trusted to pay it back? So start intelligently build up credit as soon as you can.
6. Mistake no6 is failing to invest your money or wait too long to start.
Albert Einstein "The most powerful force in the universe is compound interest."
7. Finally, do not focus on immediate financial ROI as in return on investment in all your decisions. Don't chase the money and turn down the opportunity that may bring you personal/career/relationship growth just because you can't see the return right now. So once you've established your financial base, start thinking a little bit long term!
