Although there is not a strategy or financial plan that will guarantee you to be a millionaire, it helps to have a guide to not going broke. We compiled a list of three financial mistakes to avoid. Here we’ll take a look at some of the most common financial mistakes that often lead people to significant economic hardship. Even if you’re already facing financial difficulties, steering clear of these mistakes could be the key to survival.
Three Financial Mistakes to Avoid
You may notice some of the wealthiest people are a bit frugal. This is because they know that fortunes are sometimes lost one dollar at a time. Even to the not so wealthy, that morning hazelnut latte, the afternoon pack of gum, an energy drink at the convenient store, or a couple’s dinner out does not seem like a big deal at the moment. However, every little item adds up.
If you spend $25 per week eating out, that equates to $1,300 per year. Don’t fall into this common financial mistake. With that perspective, it makes more sense (and cents) putting that amount of money to help pay for the things you need. And you might kick yourself the next time you say, “I don’t have any money.” Keep in mind in troublesome times, this misstep matters.
Not having a budget can be a significant obstacle. Budgets bring awareness to where our money is going. It shows us how we need to prioritize financial decisions. Many households are living paycheck to paycheck, and an unforeseen problem can quickly become a disaster if you aren’t prepared.
The misconception is that budgets are limited to those struggling. Contrary, we all need a personal spending plan that will provide income protection. This plan needs to be tangible and workable in front of us.
Relying on credit card debt to pay for lifestyle choices
Dave Ramsey is famous for saying “Act your wage!” which means most people are living a lifestyle that their paycheck does not afford them to. Daily luxuries that many consider necessities like cable television, music services, or gym memberships will force you to pay repeatedly but leave you owning nothing. This is a huge financial mistake to avoid. When you don’t have money to afford something in full, trimming expenses will go a long way in fattening your savings.
We are taught to use credit cards to buy essentials, like gasoline, groceries, and small purchases. However, you should avoid this, since as you can fall victim to pay double-digit interest rates. Credit card interest rates make the price of the charged items a great deal more expensive. If the lack of a personal spending plan is a problem that can delay financial life goals, then debt issues may prove to be even bigger obstacles on the path to essential goals like retirement. This includes buying things like a new car.
Although this is contrary to what people believe, buyers should attempt to pay for them in cash. If people cannot pay for it in its entirety, that means you cannot afford the car. When borrowing money to buy a car, the consumer pays interest on a depreciating asset, which amplifies the difference between the value of the vehicle and the price paid for it.
No Budget, No plan = Wasting time
You can find the secret to financial success in your daily routine. This means your financial future depends on what is happening right now. Society is spending countless hours watching TV or scrolling through their social media feeds and complaining about not having time to plan for their future. But setting aside just a couple of hours a week to review finances can change the entire trajectory of your future.
You need to know where you are currently in order to predict where you are going with income protection. Make spending some time planning your finances a priority. Keep in mind that how we choose to manage our finances and what you have in your calendar is a reflection of our life goals, values, and priorities. These decisions also demonstrate how we balance living in the moment with the need to plan for future purposes. This act can be cumbersome. Create a plan, so you have something to focus on.
Build Your Financial Strategy with Us
Steer clear of the dangers of overspending, and the other financial mistakes to avoid. Financial advisors help with just about any financial issue you have. At Alpha Omega Wealth, Our financial advisors have a wealth of knowledge to provide anyone at any stage in life.
Educating our clients is a priority because it helps you in the long run. Discover more about what Alpha Omega Wealth can do for you. Reserve your spot in the next event: Today’s Financial Freedom Workshop.