Which are the ten most common money management mistakes people make?
Check out the reverse order list below. Do you relate to any or all of them?
10. No Money Talk
I do not think people consider talking about money in the family as a taboo. Yet we so commonly find that family members are unaware of their financial matters.
Talking to your spouse and older children about money matters is important. It has to be a team effort, else your money management efforts will fail.
9. No Will
I am not talking about will power here rather it is about making a will to apportion your estate after your time.
The simplest aspect of this is having joint accounts and nomination for all your assets. So often we see this minor yet crucial matter compromised leading to stressful times later on.
8. No Control on Impulse Spending
When you do not have a plan or you do not stick to a plan, you are probably giving in to impulse spending. This is dangerous because you are digging a ditch for yourself which you won’t be able to get out of. It will be too late before you realize it.
Keeping up with the Joneses is a “financial disease” that often catalyzes impulse spending.
7. No Financial Record Keeping
If you can’t measure it, you can’t control it. Lack of financial record-keeping means that you are unable to accurately identify your lapses.
If you cannot identify your lapses, you can’t rectify them. So give yourself a chance of improving with proper financial records.
6. No Budgeting
Budgeting is closely linked to financial records and impulse spending.
Unless you have a budget and stick to it, you will be spending your money without a pre-meditated spending plan. That’s usually recipe for an over-spending disaster.
5. Not Saying “NO” to Debt
When you start feeling cushy and comfortable with living on borrowed money, financial ruin is impending. It just needs the proverbial last straw on the camel’s back.
In fact, too much debt and the wrong kind of debt pushes you to financial servitude.
4. Not Investing
Investing appropriately is crucial to wealth creation. Many don’t save at all. Others who save do not invest properly and lose their money.
Therefore, planning your investment wisely is critical for your financial survival.
3. No Adequate Insurance
Some do not have insurance all; others are under the illusion that they have adequate insurance, for their life, health or other assets.
Risk coverage is one of the first principles of money management. If the unforeseen happens, it can wipe you off financially. Even the best laid out plans come to nought and that’s why risk coverage is important.
2. No Emergency Fund
Emergency funds are the first protection against unexpected events which can ruin your budget.
You need the emergency fund to cushion your long term investments. Hence, the very first step in financial planning is to build an emergency fund
1. No Financial Goals
Without a destination, it is near impossible to chart out a path. So, not setting financial goals is a cardinal mistake which gives impetus to other mistakes.
Without goals, we tend to sell out our future for immediate gratification.
Do you relate to the most common money management mistakes? Do you relate to any of these or most of these mistakes? What can you do to shape up?