For most of us, our financial life is what we make it. The art of managing your finances is not actually how much you earn, but how much you are able to save at the end of the day. When you start to earn, often you start to make impulsive choices that may turn into bad habits later on. Financial mistakes are hard to clear up and usually take a lot of time to fix. Avoiding and restraining yourself from doing these mistakes can help you from stressing later. A proper financial planning involves more of saving and less of expenditure. A stable financial position can only come in your life when you can avoid from making the following mistakes.
Impulsive spending without financial planning!
One of the most common financial risks that people take is impulsive spending. Spending first and saving later is a big mistake that can later land you in trouble. Often people have this habit of spending based on their impulses. Many a time, they purchase stuff emotionally. even if they are not in need of it. Spending out of boredom, to relieve stress or just to be happy can take a financial toll on your bank account. So, keeping a check on your expenditure and not spending because of your impulses is advisable to reach your financial goal.
Quitting job without any financial backup!
Many people have this habit of quitting their job without a backup plan in their mind. This is a big no-no if you are aiming towards financial stability in your life. Quitting your job without having any other earning sources can seriously affect you to a great extent. There is no guarantee on when you would get your next job. So, if you are planning to quit your job without any other job in hand, this can be a bad idea for your financial health.
Not having a budget leads to improper financial health!
Not having a budget is very similar to not having a map or plan to your life! Without a proper budget, you will never understand where all your money is going. For a healthy financial life ahead, it is always better that you have a budget for everything. A budget will always allow you to assess whether you are living by your means or do you need to make any sort of lifestyle changes. This will help you to have a control over your finances and also keep you well aware of where your money is going.
No financial planning may lead for too much of debt!
If you are spending all your earnings for credit card installments, EMI payment, or any other liability, there would be almost no money left for savings. So, try to pay in cash and also opt for one-time down payment rather than installments which can put in debt. Also, credit card installment payment options can have hidden charges involved. Try to eliminate debt as soon possible as even a single debt can be a big burden for you. A proper financial plan can never happen when you have a lot of financial liabilities to pay each month. Also, late payment is a major mistake that people do often. This can result in monetary penalties that one may have to pay owing to late payment. If you are planning to form the financial foundation, try to pay your bills within the due date to avoid fines.
Financial planning is only fruitful when you have a goal to achieve. It is very important to have short-term and long-term financial goals. Make it a habit to save some amount of money from your earnings every month. The fact is that you cannot build wealth overnight, you need to work towards it by saving some amount of money every month. Try to take small steps and work towards a larger goal until it becomes a habit to you. If you are taking the help to manage your finances from any financial planner, you will be advised to write down your financial goals and aim to follow it every single day.
Highly ambitious dreams without a financial plan!
Your high ambitions can take a toll on your financial status. Purchasing expensive items, luxury cars, or house can be a long-term liability for you. You need to pay a sum amount of money every month to repay your loans. So, try to go for what is necessary and not indulge in excessive expenditure. You high ambitions can be a major constraint in the path of building up your wealth.
Not having an insurance plan!
It is very important to have insurance coverages for your health and also for your valuable belongings. We are never sure of the unforeseen incidents in our future, so it is better to have a protective cover that can help at times of need. Not having an insurance plan can incur a large amount of money when you suddenly fall sick, your car breaks down or the damage caused to your house owing to a natural calamity.
Just saving money in bank savings account every month is never a wise decision if you are aiming towards financial stability. The bank accounts offer very less interest rate which is not profitable in the long run. You need to invest money in places that promise you the higher rate of returns. Investment planning is a crucial step of your journey towards financial stability. So, you need to seek help from an experienced financial planner who can guide you toward investing in the right places every month. Also, it is important to have an investment goal in the course of your financial planning period. This can help you to save a lot of money even when you are not working, or you have retired.
Seeking financial advice from friends or family!
No, all people are experts in the financial domain! Advice and suggestions from your near and dear ones are not always helpful. It is better to seek help from a financial advisor who can guide you in the right direction. The right advice in terms of managing money can only be given by experts who are skilled in this domain and are experienced to give you the correct piece of advice.
Why seek help from financial advisors for financial planning?
It will take a huge task off your plate when you have a financial advisor to monitor your investments. They will also help you develop short-term, middle-term and long-term plans to unlock savings growth. Experienced and skilled people will help you set realistic goals along with saving some amount of money from your earnings every month. An advisor can examine your financial health and situation after collecting all the required financial data. Then it is easy to chart out your financial goals for better financial management. The advisor can also recommend products to help you reach your goals faster. So, if you are looking for someone to seek help regarding finance control, it is always better to take help from professional financial advisory services.
Next Article A guide on why & how to find financial advisor in India for yourself?
Shashank is an MBA Finance & Certified Financial Planner (CFP). He has been in the financial services industry for more than 3 years. At Money Dial Shashank heads the Product. Shashank has a penchant for writing and giving trainings on financial markets and often has many interesting things to share.