10 Sure Ways to Wreck Your Finances
1. Don’t keep track on your finances
The reason most people get into debt is because they don’t spend enough time keeping track on their finances. You need to get a grasp of where you’re at financially, keep track of your income in relation to expenses and spending habits. Keep a small pocket sized notebook and try to track all your expenses for a month. Then you’ll know where all your money disappears to.
2. Failure to have a financial plan
No one would imagine going on vacation without planning for it. Yet when finances are concerned, many people don’t plan. A good financial plan can be the difference between comfortable living and struggling to get by. As the world famous saying goes – failure to plan is to plan to fail!
3. Waiting too long to invest
When making investments, time is of the essence. Compound interest, said to be the 8th wonder of the world, earns money over time; so don’t wait too long to save for retirement. Even a small sum for you to start off an investment would be good enough. There are many investment tools that can be considered – stocks, properties, mutual funds, etc. The longer you wait to invest, the smaller your return on investment.
4. Marrying the wrong person
Who you marry has a huge impact on your finances. Couples with different views on money, create stress in their marriage. Make sure you discuss with your would-be partner regarding financial matters after marriage, not only family planning.
5. Bad habits
Bad habits are not only bad habits, they are also bad financially. For example, if you smoke or drink alcohol, you have to allocate a certain portion of your income to these ‘vices’. Apart from that, it will also affect your health. Then, additional $$$ is needed to treat you back to health. If that doesn’t sound convincing enough, try this – mostly all governments raise ‘sin taxes’ yearly to cover up for their growing expenses. If you smoke, the cost of cigarettes along could drive you to quit.
6. Let your credit card balances run high
If you carry unpaid balances on credit cards, you are already losing money in interest payments alone. Credit cards have very high interest on them. DO NOT practice to have the convenience of paying off the minimum payment alone. Very soon, you will find that even without additional charges to card, your debts will grow very quickly and often more than your initial debt. However, credit cards can be kept as a emergency resource for cash and the debts incurred should be paid of at the earliest time possible.
7. Be under-insured
You need to protect yourself and your family from unforeseen emergencies, sickness, accidents and possible death. The goal is to make sure that you have proper financial coverage incase anything should happen.
8. Investing in things you don’t understand
The best investment you can make is on yourself. Invest in books, read financial books, magazines and attend seminars if you need to increase your financial knowledge. Make sure you really understand what you are investing in. Ask a lot of questions; don’t hesitate to get another financial opinion.
9. Eat out everyday
If a breakfast meal cost you 3.00 and a decent lunch another 5.00, you will be spending 8.00 a day on meals alone (assuming you go home for dinner). That works out to be 224.00 a month and 2688.00 a year. Easily you can save half the amount if you start practicing packing your own lunch box. The left-over income can be used to settle your debts earlier or used for investment purposes.
10. Failure to practice delayed gratification
‘Once you see it, you must have it instantly’ attitude is a dangerous sign. As most financial gurus would preach, get started in life with very minimal debts/expenses and use the income saved to invest in instruments that can generate passive income later in your life. Then you can afford to have the luxuries of life!!!