Everyone make some financial mistakes because of the complex personal finances, and they learn from the past financial mistakes after paying price for the same. Financial experts say that “Listen only to your mind” while making any financial decisions”. The biggest problem with people which in turn is sole reason for committing financial mistakes is “FREE ADVICE”. Many people give free advice even when they don’t have the full knowledge about that particular thing. This can be in anything such as in insurance, stock or an investment. For an example you ask a bank employee which insurance product is suitable for you. Now you can’t expect genuine advice from his end he will suggest you the one for which he need to complete the target. One should always take their own financial decision because he/she is the only person who knows the needs, requirements, eligibility and priorities 100% accurately. If you need help go to the professional advisory and pay them for their help.
Your future financial condition will be a direct result of the financial decisions you take today. A poor financial decision or mistake has a very strong chance of severely impacting your future finance.
The Financial Mistakes of 2017 that You Should Avoid in 2018
- Spending excessively or living beyond your means
People often go to restaurants more often than their wallets allow or pay for lavish birthday parties, marriage anniversaries or even to some holiday trip that empty out their pocket along with the bank account. Living beyond your means and spending more money to impress others is a financial black hole.
Sometimes, over spending comes not only from a wish to impress but purely from carelessness purchasing. By seeing sale notification on their mobile many people become crazy and a reckless shopper too. They start purchasing many things just because it is on sale.
- Under Saving and Under Investing
It is never too early to save or invest. You should start saving from the day you start earning. You must save at least 10% to 15% of your monthly income and increase it whenever you can. The earlier you start saving and investing, more will be the money which you will get at the end. Compounding is the best thing which can make your money grow fast. In 2018, set a realistic goal for your finances. When you are young, you have no liabilities and it’s the best time when you can invest and save, be flexible with investments don’t rely only on PPF.
Now a days, you can start SIPs in mutual funds so that your investments are regular and this is the best available plan as the interest you get on this is maximum. Save money for your retirement funds so that you can enjoy a good life after retirement too.
- Not Fetching Your Credit Report Regularly
Many people don’t realise the importance of checking their credit score regularly. There are chances that your CIBIL contain wrong information due to the certain error made by your lender (bank) or due to any technical issue. Such misinformation can reduce your CIBIL and, your future credibility may get hampered. Monitoring your credit report at regular intervals is the only way to avoid such mistakes. CIBIL, Equifax are the some authorised bodies which maintain your credit history and provide CIBIL report too. So, you should check your CIBIL at least twice a year.
- Spending First and Saving Later
This is a common misconception of people that our savings comprise what we have left over after our monthly expenditures. However, this approach has it drawbacks—it’s better to first define the amount you wish to save monthly and then make your budget of your expenses according to that—this will not only help you with cutting your excessive spending, but it will also help you to be focused on your savings goal and to achieve them.
- Getting into Debts and Bad Credit
One of the most common and biggest financial mistake which people make is getting into debt. The reason behind this can by unlimited from not paying bills on time, to building up amounts on your credit cards, taking on too many loans or a loan which is not easy to repay. These problems can be solved by a combination of financial disciplined life which includes budgeting, reducing unwanted and useless spending. One should take steps for building savings and investments to tide over unanticipated expenditures.
These mistakes can be avoided if we keep in mind certain things be focused on our financial goals. Planning for the future is most important and we should never, ever, underestimate the power of compounding! This can make your financial future strong.