Here are 10 Crucial Money Mistakes we must avoid. At school, we learned some skills necessary to get a job, but nobody tells us how to create or manage our money. If we cannot educate ourselves on ways to obtain and retain our money, we are headed for a future financial disaster.
Here are 10 Crucial Money Mistakes You Must Avoid.
1.Borrow Money from Friends and Family
When you are in a tight financial situation, you may be tempted to borrow money from your friend or your family member. When you do this, you put a strain on your relationship with them. They may begin to question your financial decisions and feel like they can make comments about your spending habits. They may also need the money back suddenly or you may feel guilty whenever you see them.
The book of Proverbs claims that the borrower becomes a servant to the lender (Proverbs 22:7.) This is exactly how you feel when you borrow money.
2. Never borrow money to start a business
Never borrow money that accrues interest to start a business. That is to say, never borrow money to start a business expecting that the business will generate income to pay back. Most business takes time to generate profit.
One book you must read: Cold Hard Truth On Men, Women, and Money: 50 Common Money Mistakes and How to Fix Them.
3. Not following a clear financial plan
Without a written financial plan, there’s no destination in mind, and there’s no tangible concept of how much is needed to be saved. A clear financial plan includes savings goals. Start by establishing what is important to you, and get an idea of how much and for how long you would have to save in order to reach your goals.
4. Not keeping track of your finances
Tracking your expenditure means keeping track of every purchase you make. By tracking your spending, you can make adjustments so that you can live within your means and save more money. Related: 10 Surprising Benefits of Tracking Your Spending
5. Save before spending
Do not save what is left after spending; instead, spend what is left after saving. Whenever you receive money, don’t start spending hoping that you’ll save that remains. Normally what remains is zero because as long as money to spend is available the numerous things you can spend it on.
6.Spending too much on a wedding
If you decide to tie the knot, it’s tempting to throw the wedding of your dreams. And there is nothing wrong about that but If you have to go into debt for a wedding, just don’t do it. Debt could doom your financial future and your marriage by causing fighting if the bills become hard to pay. Even if you have enough savings to pay for a dream wedding, think about what else you could do with that money.
Some people even borrow money from the bank for their wedding thinking that they would get enough money o pay the bank loan, don’t forget the opposite can happen.
7. Never lend someone money you are not willing to lose
By the time you lend someone money, be content in your heart that in case the person fails to pay the money, you will not die. You should not even lose that person’s friendship if they fail to repay the money you lend them.
If their failure to pay would make you hate this person, please advise this person to look somewhere. Just a small amount of money can destroy a friendship.
8. Whoever guarantees to pay somebody else’s loan will suffer
It is safer to avoid such promises. Proverbs 11:15. Never append your signature to guarantee on a financial matter if you are not willing or able to pay the money on their behave. I think this is self-explanatory.
9.Depending on one income flow
In my view, this is the number one reason why most people are poor. No matter how big your income is, never depend on one income flow. The rich never depends on one flow of income but instead, they create a number of revenue streams. Building financial freedom, a successful business, or a great sales career, all require multiple flows of income and opportunities.
Ship your grain across the sea; after many days you may receive a return.
Invest in seven ventures, yes, in eight; you do not know what disaster may come upon the land. Ecclesiastes 11:1-2(NIV)
10.No Emergency fund
An emergency fund is a cash that is set aside in case you experience an emergency such as a car repair, house repair, layoff, sickness, etc. When something goes wrong and you have the money, it’s a great feeling. No panicking or worrying how you are going to get the money to cover it because you are already prepared.
You can start your emergency fund by setting a financial goal and putting a little money aside each pay.
Living in a place you can’t afford: Most financial experts say you shouldn’t spend more than one-third of your take-home pay on housing and related expenses. This is especially true for those who don’t make much money because other bills will quickly gobble up the rest of your budget. Think of it this way: If your take home is GH₵ 2,000 a month but spend half that on housing, you have GH₵1,000 left to survive.
What other Money mistakes you think we must Avoid? Scroll down and please leave a comment!