Do the years you’ve spent on your work to earn money worth the effort? If not, what do you think went wrong?
Is there any financial decision you’ve made in the past that you regret?
All of us might be making financial mistakes. Some we are aware of. And some were probably not.
But before you feel bad about yourself, don’t fret. It’s not yet too late. Every day is a new day! And every day is a new chance to become better. What’s important is, you learn from these mistakes and start improving your financial habits.
First, accept that something is wrong and be aware of them. By being aware of these mistakes, you’re most likely to correct them.
Here are some financial mistakes you might be guilty of and tips on how to overcome them.
Mistake #1: Having savings account only
When we were kids, we were taught by our parents to open a bank account. Start saving at an early age until our money accumulates without noticing it. Though it is not bad to have savings accounts, it is also not advisable to rely only on this. Interest rates have been extremely low that the earning potential of money is lost. What if you invested your money on something else? Perhaps, its value would worth more!
Solution: Diversify your investments
Have you heard of stocks, bonds, and mutual funds? These are some investment vehicles worth trying.
What are these?
The stock market is about buying a piece of ownership of a company. Here, you earn by trading and receiving dividends. Bonds is where you lend money to a corporation or government in exchange of periodic interest and face value after maturity while a mutual fund is putting your money in an investment company and let professionals manage your money for you.
Have the courage to take risks because having a savings account is not enough to keep up with inflation. Rich people don’t settle with just savings account, they maximize the earning capacity of their money.
Mistake #2: Not taking extra earning opportunities
Most of the time, we’re contented with our lives that getting out of our comfort zone is terrifying. You are lucky if your day job is enough to sustain your needs but most likely than not, being an employee is never enough. We can have more if we want to!
Solution: Create a side hustle and starting a small business
Is your income not enough? Look for a part-time job. You can be a Lyft driver, a virtual assistant, or a tutor during your free time.
Don’t get confined with the four walls of your corporate job. Always aim to establish your own business. Start small with a dream to make it big by working hard to achieve success. It is hard to get rich with an employee mindset. Take advantage of your skills, technology and the things you love to do when starting a business.
Mistake #3: Not building for the future
This is one of the most common mistakes everyone is guilty at some point.
We’re not getting any younger. Before we know it, we’ve aged and we are not prepared for what the future may bring. We are too relaxed living in the present. What if we get sick? What if an emergency happens? In life, there are lots of surprises and uncertainties.
Solution: Establishing an emergency fund and retirement fund
Our time is limited! We will not be as strong tomorrow as we are today! Allocate even a small portion of your income to retirement and emergency fund. Little is better than nothing. If we start early, we will be surprised that our funds have grown into an acceptable amount over time. A tip is to have part of your payroll be automatically transferred to your retirement or emergency fund so you won’t forget it.
Mistake #4: Overspending
Do you eat out a lot? Do you shop as soon as you receive your paycheck? At the end of the day, do you find yourself negative and no savings at all?
Listing down your income and expenses is not a waste of time as others think. It will be one if you fail to stick to it. If you are aware of your financial responsibilities, you will think twice to spend on unnecessary things. Budgeting helps you track your spending and will raise a red flag if you are mishandling your money again.
Mistake #5: You don’t enjoy your money
There should always be a balance. Oversaving won’t make you happy too. Don’t be afraid to enjoy your money, you deserve it! We get more inspired to do better if we reward ourselves.
Solution: Re-evaluate your goals
What are you working hard for? What do you like to achieve? Be specific. Maybe you are starting to be irrationally anxious so rethink of your goals. We save to be comfortable anyway and be secured. It is your money and doesn’t feel bad to use it. Enjoy life!
Even the richest people make mistakes financially. It is unavoidable. Own up to your mistakes and keep an open mind to correct them. It’s not yet too late. Take action now. Years from now, you’ll be glad you did.