Man is the statue of mistakes. Everyone makes a lot of mistakes in life at every stage of life. Some mistakes are avoidable and some ruin our life for which we regret our whole life. So, we are here to discuss that type of financial mistakes we make in our life without knowing and that is, not managing the financial journey of life.
Even we made lots of mistakes when we started our financial journey. But by some experts and by some our own mistakes we learned and realized them. But we don’t want you to do those mistakes. Let’s discuss the mistakes which we done but you should avoid to have a better future and smooth financial journey.
Let’s see top 5 common mistakes we do in our life.
1. Taking Loan too early :-
The first and one of the biggest mistakes we make is that when we start our job and in just one year we take personal loans for normal requirements. The requirement of that loan is not that much in real life.
Always go for the loan when it is utmost require and you can’t sustain without that. Until and unless try to avoid taking a loan because it takes a big chunk of your salary every month and also overall after years it looks expensive.
The time when we think of loans at that time psychologically we take it as a free income but in reality it is to go from your pocket with interest Also sometimes we think that if we take loan then we will repay it early from salary but in reality it does not happen.
2. Not starting Investment early :-
It is also one of the common financial mistakes which we do and a lot of middle men do. When an individual starts earning he don’t think of investment and savings.
Everyone thinks that now we have income and we will fulfill our dreams and due to that we waste all money in those things which are of no need like going pub, drinking and parties etc. We think that we are enjoying it but in reality it’s all wastage for which we need to repent later on.
So, always start at least 10% of your income investing. If you have no knowledge then at least start SIP in the Index fund. We are not saying to invest in direct stocks, but somehow start putting your money on work for future financial goals and requirements.
3. Expenditure blindly without a plan :-
In the beginning when an individual has his first income then he thinks money is to come every month to me. In that thought he starts wasting that money on things which they do not require in real just to show off that they are rich.
People start buying expensive clothes, mobile phones, bikes or cars and many things like that. They don’t able to understand the real value of saved money. But when their salary is ruined in these then they wait for next month. This is because they have no budget for expenses.
One more reason for those expenses is credit cards. Our money at the time of expenses is not going from the bank account so we thought it is free and kept doing more expenses.
Rather than this we should make a monthly budget about expenses that are important and must. Always have a fixed percentage of income that you can put on expenses. For this one can use the 50:30:20 rule.
This rule says that spend 50% of your income on household expenses that are important like education fee or medical fee or on health as per individual’s own requirements. 30% you can spend on exploration for yourself like travelling, books and enjoying some. But in this it should not exceed the limit. The remaining 20% should surely be saved and invested for the future.
4. Emergency Fund :-
It is the big blunder we do. Not to have an Emergency fund. When we start earning we can’t predict life. Unexpectations are always there and to tackle those we should have an emergency fund. Many people and families faced a big problem just not to have money for emergency expenses.
So to save ourselves from that we should have money saved with us which should be approximately 6 times of our monthly income. By this we can tackle any miss happening if happens to us or our family.
5. Not to have Insurance :-
I also did that blunder in starting. I didn’t take any kind of insurance. But we should have at-least one Term insurance in our life specially if our family is dependent on us. It helps our family not to face problems in our absence if something wrong goes on.
To save from big wealth destruction we should also have Health insurance. It helps us save from big expenses of hospitals if something goes wrong. So, we personally recommend all to have these two insurances so that your financial journey can be smooth and better.
It saves you and your family from big blunders and also makes life smooth. If one has managed his earnings well then even if his earning is less he will not have to face big problems due to money.
Conclusion :-
So, these are the top 5 common mistakes which most people do and because of which their whole financial journey is ruined. Mainly in rural areas people think it wastage and they don’t focus on it. The main reason is that they have no knowledge about it.
We shared these and we hope you will not repeat these after studying this article and start learning about finance and make your financial life better.
If you want to learn about money management you can visit our website https://buffett.money where you will get a lot of content to learn in both Hindi and English.
Learn More :
Thank you for reading Buffett Money’s guide on the 5 common Financial Mistakes. To keep learning and developing your knowledge of financial analysis, we highly recommend the additional resources below:
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This is for education purpose and increasing financial literacy.
Thank You
Happy investing🙂
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