People make mistakes, some are small while some mistakes leave a big impression on our life. There are some mistakes which make us regret our decision. It’s like we got late to work for our mistake of forgetting to set the alarm, but marrying a wrong person can make us regret throughout our life. This single concept applies to the financial issues as well. Mishandling our money at an young age can result on regret all our life after 50s.
So give wings to your financial planning, don’t wait for the 50s to start thinking about saving and retirement. Here is list of some financial mistakes which affects people and why you should avoid them:
Not paying off your credit card debts
The habit of not paying off credit card debts can be dangerous. Credit card debt is even worse than exploiting your cash to stagnate in fixed deposits. At a rate of interest of 30% per annum and above (which in some cases are often revised upward if you’re late with repayments), credit debt is the surest way to bleeding cash.
The credit card debt can not only leads high late fees but also affect your credit ratings. Untimely repayments and high credit card dues result in downgrading of your credit rating and affects your future ability to take a higher loan.
No Equity Investment
The best time to start saving and investing is when you are young and start earning. If you think you don’t earn enough to invest then you are wrong. Start small with fixed recurring deposits and scale up as you earn more. Investing too late in life can put you and your family at a financial risk. Believe me, the earlier you start saving, the quicker you will reach your goals. Start investing in equities early on in your life. Equities give best returns over a long term and help you bear inflation and make money. If you aren’t sure of equity stock investments, then start investing in mutual fund SIPs.
Getting interested in dubious schemes
This is the worst thing that you can be lured into. Greed drives many investors to invest in dubious schemes. Many fly-by-night companies operate Ponzi schemes that offer fantastic returns on your investment that can even sum up to 10-20% per month. You would not see anything wrong happening with you until you get cheated and loose all your money. It’s better to avoid these get-rich-quick offers rather than regretting it in your 50’s.
Showing off more than you afford
Accept the fact that we cannot spend more than what we earn. However, many people nowadays believe in living a lifestyle they can’t afford in reality. That makes them spend credit card money on unnecessary things that they can’t even afford.
Learning to live below your means can really give you the power of financial freedom. This simply does not mean that you have no life today, but live a lifestyle you can afford, keeping your future in mind.
Spending all your money on today
Avoid spending on luxury items like cars, gadgets or holidays you can’t afford today. Start saving for your holiday or dream car and by the time you save up, you can decide whether you really need it. Do not commit a huge part of your salary into mortgage payments to buy luxury.
Start early, since age is on your side and you will reap the benefits early. Not only will you be able to meet your financial goals easily, you will also have the peace of mind at a later age.