Mistakes are not something new. Everyone makes mistakes. But the key here is to learn from mistakes and not to commit the same mistakes again. You can learn from your mistakes and even from someone else’s mistakes. Some people make mistakes and pay dearly for it., especially when they make financial mistakes.
Here are a couple of financial mistakes to avoid. Let us get started.
1. Being a spendthrift
Spendthrifts spend money without thinking of future consequences of spending money carelessly. Advertisements and sale offers are big culprits here as they encourage people to buy things they don’t need. Credit cards have added to the trouble due to easy availability of money. Ensure you avoid being a spendthrift. You can save lots of money just by controlling your impulse.
2. Borrowing more and not clearing debt
You borrow lots of money and keep debt pending. This is incorrect. You should quit taking loans and start repaying all the debt you owe, at the same time saving money for the future. This problem increases due to credit cards as people use credit cards even to buy basic necessities and pay bills.
3. Not investing
In today’s age, mere saving is not enough. You could keep some money in a jar and store it under your carpet. A decade later its value remains the same. However, if you invest the same money, in a decade its value would have increased. This is imperative as inflation is on the rise. Prices will rise and everything will become more costly. What you buy today will be available at a higher price tomorrow. So, invest in different funds.
4. Not keeping a rainy day fund
We are talking about Emergency Funds here. An ideal emergency fund, according to experts, should consist of 6 to 12 months of your income. An emergency fund is kept to ensure you have money in case of an emergency like loss of employment, accident and hospitalization, etc. Keep an emergency fund, start one now.
5. “Saving for retirement? What’s that?”
Many people don’t bother about their retirement. There are many reasons people give to forgo retirement planning. But they do neglect retirement planning. Retirement planning, as the name suggests, is for taking care of your needs when you are no longer actively employed. People realize this very late in life often. Start retirement saving as soon as you begin earning. You do not know what the power of compounding is and how it helps the earlier you start.
6. Not having insurance
People in India lack awareness about insurance in large numbers. Only a tiny fraction knows what insurance is and why insurance is needed. Very few people go for insurance. Term Life Insurance, Health Insurance, Travel Insurance, etc are all very important. It provides safe cover. So go buy insurance now.
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