Got some savings? How about investments?
If you do, pat yourself on the back!
Unfortunately, we tend to lose our income without realizing where we’ve spent it. We are working so hard yet we have no idea where our money has gone after all these years.
So why do these happen?
Why do we lose our income?
It’s important to know what’s causing our financial issues so we can be aware of our bad money habits and start with new and healthy ones.
Here are six reasons why you might be losing your hard-earned income.
Maxing out credit cards
Having credit cards are very convenient. Today, carrying a large sum of money when shopping is no longer practiced. Need to ride an uber? Or need to buy something online? Just swipe or enter your card details for a fast and hassle-free transaction. Since it’s very easy to use, we sometimes fail to track our expenses and max out our credit cards without us realizing it.
What to do to avoid maxing out credit cards? Make it a habit to file your receipts. No one is stopping you to use your credit card but make sure that by the end of the day, you get to list down all your transactions. Treat credit cards as actual cash so you can budget and you would know when to stop. If you can’t control your spending habits and could get tempted easily, the best to do is to just leave your credit card at home.
Do not enter into any kind of investment without studying them first. There are risks so make sure that you’re aware of them. If you cannot understand, seek help from professionals. You can enter into a mutual fund if you want someone to manage your finances for you.
Do not be fooled easily by people asking for just a small amount of money with the promise of big returns. Most likely, these are scams. Always remember “The higher the risk, the greater the return”. There are no shortcuts.
Spending for pleasure
Most of us are guilty when it comes to spending for pleasure. It is never wrong to reward ourselves once in a while by buying our wants rather than our needs. It is our hard earned money after all so we have every right to enjoy it.
But do not splurge. If there’s something you really want, learn to compare prices. Take advantage of sales and discounts. Avoid impulse buying. If you want to travel to a lot of places, plan way ahead so that you can book in advance which is likely more affordable. Do you go or eat a lot outside? Perhaps, try cooking your own food or just take a rest at home, this way, you can save bucks. We can still live a pleasurable life even if we live simply.
Accumulating interest rates
If not properly monitored, interest rates can also make you lose control of your income. Do you have loans or planning to apply for one? Make sure that you can pay your bills on time to avoid penalties. Check your loans and their corresponding interest rates, start paying them one by one so you will not just end up paying the interest instead of the principal. Be debt free so you can use your money on something that is income generating.
Having the wrong mindset
A wrong mindset can largely affect control of your income. One common mindset especially when you are young is that you believe that you still have all the time in the world to save. I will start saving tomorrow instead of starting saving today. I’ll just enjoy living in the present.
Mind setting includes establishing a vision. This is firmly knowing what you want and act on it to achieve your goals. “I want to retire at the age of 35.” If you develop this mindset, success is not impossible. A proper mindset helps you build your habits, guides you in our daily actions, and inspires you not to get discouraged when things get tough. You are more focused and at the same time, you’re not easily distracted.
Do you drink or smoke? Do you eat nutritious food? How is your lifestyle? Believe it or not, maintaining your health is a good sign you’re a good steward of money. Any health issue resulting in failure to report for work means lost income. Take good care of your health because unexpected medical and hospitalization expenses may exhaust all your income.
Have you found yourself guilty of any of the reasons mentioned above? There is still time to review your financial health. Practice discipline and spend wisely to enjoy your income for the longest period of time.
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