Today I want to share with you 4 common personal financial mistakes most of us do.
- Not Budgeting
The fact is that, Companies thrive on impulse purchases, if you disciplined and set a budget you can avoid throwing money away on things you don’t need.
They made you believe that you need it all now.
No time to wait.
Just buy, buy and buy some more.
They know you would want it because your friend got it
Your friends even posted about it in social media.
They made you believe that your life wouldn’t be complete, or as good as your friends if you didn’t buy it too.
You have to know that, some of the world’s most BRILLIANT minds are Marketers, who are HIGHLY PAID by Fortune 500 companies.
They know what you want before you even want it.
Even if you don’t think you want it now, they will show you why you NEED it.
Whether you like to believe it or not, our societies are built around CONSUMERISM.
You can either decide to believe their pitch and mass consume, leaving you with nothing left over.
Or, you can ignore the pitches. Ignore what your friends, family, and neighbors bought.
Mind YOUR business, and know what YOU want, not what THEY tell you that you need.
- Wait to Invest
Compound interest is the best reason to start investing as early as possible.
Yes if you invested $100 every month starting at the age of 20 at an average rate of return of 8% per year, by the time you’re 65 years old you’re going to have over $500,000.
But if instead you decided to put this off for a few years and enjoy spending an extra $100 per month on coffee and eating out, and finally decide to start saving by the age of 25 that same $100 per month invested would only be worth 337,000$
Over 25, don’t panic!
My message to you is not too late, you just need to be more aggressive at saving the closer you are to retirement.
Never estimate the advantage of time.
So, start saving and investing as early as possible
- Expensive Cars
Some people have $40,000 in savings and buy a $40,000 car.
Before you buy a car think about the opportunity cost.
What’s going to have the greatest impact on your financial position down the line owning that car or investing that money.
- Credit Cards
There’s nothing right wrong credit cards.
If you’re disciplined enough not to abuse them like most people do.
Make sure you don’t pay the 17% on your credit cards.
Interest on personal loans that it’s dead money.
if you can’t afford to buy it, don’t buy it at all.
I’ve seen far too many people fall into the trap of spending money that they don’t have because it’s tomorrow’s problem.
if you stuck with credit card debt pay as much of your free cash towards the debt as you can there’s nothing worse than leaving the debt outstanding because you’re only paying interest.
Don’t get me wrong.
Credit cards can be great for building up your credit rating and even for getting free vouchers, BUT use them carefully.
If you have credit card treat it as debit card.