Money Mistakes to Avoid in 2019

The issue of finance is not one to be taken lightly. Financial management, in the totality of the word, refers to strategically planning, organizing and directing your income to meet your day to day needs. A thorough understanding of one’s financial inflow and outflow is necessary to manage one’s income.

Financial management is a learning process and as such, it can be a little overwhelming. A lot of people struggle through life simply because they lack the ability to successfully manage their finances. To enjoy a successful financial life, you have to avoid making these mistakes:

  • Living Above Your Means

Protecting yourself from spending above your means is a good way to manage your finances. What is the point of spending more than you make? You end up accumulating more debt which by all means, is not a good thing. It is said that when you spend smarter, your money goes farther.

The trick here is to avoid spending triggers. We all have places, people, or things that trigger us to want to spend a little too much. In order to break free from these triggers, it is imperative to give yourself a reason not to spend. You could set goals and stay conscious of them.

Another way to avoid living above your means is to look for saving options before you buy something. For instance, we all have that regular supermarket or grocery store where we like to buy things from. These supermarkets sometimes offer discounts and specials that you will know about if they are your favourite; wait for that time before buying.

  • Spending Every Dime

Spending every dime that you earn is simply not smart and it shows how irresponsible you are. It is a grave mistake that will drive you into the bondage of poverty because you will eventually end up borrowing from family and friends even before your next paycheck. And when you finally get paid, you have to keep servicing those debts and so the cycle continues.

When it comes to saving, investment is the most logical and profitable alternative. Although investing involves a certain degree of risk, taking a well calculated risk is often times a necessity.

  • Not Planning a Budget

Setting up a budget is a prerequisite for determining your financial success. It is very easy to spend all your income on daily wants and needs without saving a dime. Setting up a budget will help you prioritize your spending. Budgets provide a kind of roadmap for your finances, keeping your spending under control.

Many people often see budget as a kind of restriction or financial prison. That’s wrong, budget does not necessarily mean cutting out all fun and frivolous expenses from your life, it only helps minimize the degree at which you often spend on frivolous things. Ultimately, it keeps you from worrying about your financial status.

  • Having No Financial Goal

Having no financial goal makes you lazy. You tend to develop a lackadaisical attitude that can be destructive and depressing in the face of a financial emergency. Having a financial plan or goal allows you focus on your long-term plan that helps you reach your short-term goal or plan. It can make you stop making financial decisions based on impulse or sometimes fear. If you want to be successful financially, it is necessary to set a standard you would want to achieve within a time rate.

  • Lack of Emergency Fund

An emergency fund is money kept aside in the bank to cover large unexpected expenses. Setting aside fund in case of an emergency provides you with a financial buffer that keeps you afloat in desperate times without having to rely on family and friends or even seeking high interest loans to cover expenses. You could have a secure emergency fund by setting up an ideal insurance cover. This is especially important if it covers your professional indemnity, within your own career.

  • Depending on One Source of Income

Most people do not think about being laid off or their company going under. But these things happen more often than not, especially in this generation where the market is tough and very competitive. Relying on one source of income in this generation makes you vulnerable to unforeseen circumstance. Building multiple streams of income is no longer a luxury, but a necessity. Having multiple streams of income prevents you from unemployment, rising economic challenges, rising health care cost etc.

  • Inability to Differentiate Want From Need

The inability to differentiate between want and need poses a serious financial challenge. This problem makes you spend money on things that are not of primary importance. A want is said to be a choice, a desire which a person may or may not be able to afford or get. It is not a necessity.

A need on the other hand is something that a person must have in order to thrive or survive. Without it, a person may suffer either physically or mentally such as the need for food and shelter. It is recommended to build a scale of preference of the things you need or want, according to their order of priority.

2019 could be your best year yet if you avoid making all these money mistakes.

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