8 Personal Finance Mistakes You Should Avoid at All Costs
When you plunge into the world of adulthood, you’ll soon realize that there’s more to money than you can think. You’d want to stay on top of savings, investment, spending, budgeting … the whole shebang! And, yes, mistakes will happen.
To help you stay the course, here are eight money mistakes that you should avoid at all costs.
#1. Not Building an Emergency Fund
When you get your first pay cheque, the first thing you should do is tuck away some of it in an emergency account. This is money that’ll help cushion you against financial emergencies like hefty medical bills, emergency car repair, job loss, etc. Not having an emergency is fund is like welcoming wrath during rainy days.
#2. Spending a Lot of Money on a Car This is money mistake that most people commit in their 20s. Just because you have landed a good, well-paying job doesn’t mean that you should splurge on a new, flashy car. To add insult to injury, the car itself is most probably a fuel guzzler. That’s not even the worst it, buying a ridiculously expensive car on a loan is another story and a huge mistake.
#3. Living on Debt “If can’t afford it, I won’t buy it” should be your mantra when it comes to personal finances. Just because your credit card as a max of $5,000 doesn’t mean that you should buy that glitzy dress or go on a vacation. If you can’t afford something, don’t put it “on the card.”
#4. Not Saving Money Need we say more? This could be the biggest money mistake you’ll ever make. Even if your income is small, you must put away a little for the future. In fact, as a rule of thumb, you should save at least 20% of your monthly income.
#5. Not Planning for Retirement In addition to saving and building an emergency fund, you should also start a retirement fund as soon as you get your first job.
#6. Making Never-Ending Payments Do you really need to pay monthly for music service, gym membership, cable TV or landline? These never-ending expenses are budget bloaters that you need to get rid of immediately.
#7. Living Pay Cheque to Pay Cheque Living paycheque to paycheque means that you don’t save money. That’s a dangerous habit that can land you in hot soup in case of unforeseen disasters.
#8. Not Having Financial Goals and Plan How much time do you set aside for budgeting, savings, investing, and other aspects of your personal finances?