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Nothing beats the joy of receiving a pay-check. Whether it is transferred directly to your bank account or handed out in bills that one tiny awaited moment delivers truckload of happiness. And though this joy lasts for a short while, thanks to the pile of pending bills and credit card debt, it does amount to something worthwhile. Maturity is when you realize earning is not just about collecting lots and lots of money, but rather managing it a correct way. Hence it goes without saying, you must and MUST (in loud, bold terms) manage your finances well. Like we don’t have enough on our plates, the last thing we want is to deal with money issues due to mismanagement and poor-sighted vision.
So where does this lead us to? It calls our attention to reflect over money matters. After all, money does matter hence it is imperative to focus over them. You may be doing your best favorite job in the whole world or following your passion to heart. You may be earning lots of money along with peace of mind, happiness and satisfaction. But is that enough? Sorry to burst the bubble, but I don’t think so. What is important is to organize your finances well and avoid the common mistakes that most people are making today. The value of your net income or salary does not matter. What matters is the skill to organize it like a pro.
Let me take you through some of these mistakes so you can avoid them in the future, and yes you can thank me later!
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Nil Savings – Fill Tensions
Saving money is often regarded as a herculean task- challenging, difficult or simply impossible. After all, saying no to an interesting long trip or that new exotic restaurant in town can be difficult. But what we fail to realize is saving does not mean locking away all your money and living like a miser. It simply means setting some portion of your income aside for emergencies and building a base to purchase an asset in the future. You must be able to save at least 20% of your income. Most people spend almost every single dollar of their monthly income and complain of low pay. But the reality is no matter how much or how low your job pays, the simple calculation is to set aside some savings as a rule of thumb.
Higher Credit Card Debt
There is no doubt in the fact that credit cards are extremely convenient. It allows you travel without any fear, gives flexibility to buy whenever and whatever you need and simply turns into one-card-fits-all formula. But this convenience adds its own set of problems. People often end up spending more than their balance, fail to pay back on time and increase unnecessary debts in their name. It is important to understand income, budget it well and then spend on these shiny plastic cards. Even if credit cards do not take away your money then and there, you still have to cut it from your existing balance right here and now.
Lack of Financial Planning
Yes, add financial planning to the ever-increasing list of your life plans, but it is important and unavoidable. People often fail to set short-term and long-term financial goals. You must include this task in your monthly and yearly to-do list. Plan your needs, allocate budgets, save aside for emergencies, set goals and act accordingly. It is incorrect to say that one must not spend money on himself/herself. The problem lies in burning away all the money at once. Set financial goals to build your dream house, send your kids to college, plan that exciting world-tour and live like a king/queen (costs nothing to dream!) Everything is impossible if we fail to plan, and nothing is impossible if we do it just right.
Falling Back on Payments
No fortune-telling machine can predict all your unexpected financial burdens well ahead of time. There can be dark days when you are forced to delay payments due to emergencies. But the problem arises if we make it a habit. It pulls you into a vicious cycle that simply never ends. One delayed payment is like a clear invitation to more troubles. When people fall back on paying their bills, mortgages, insurance or other commitments, the pressure builds up to extreme levels. Do not spend more than you can afford, pay all the bills first and then spend on your luxuries. Treat this as a mandatory formula and see the benefits.
Calculations in the Air
This is similar to building castles in the air. Lack of accountability is the number one cause of financial stress. Earning less may not be the real problem, but spending more is often the main culprit. This is why do not run away from the boring task of ‘budgeting’. Most people do not maintain an excel sheet of their income, expenses, assets, liabilities, and saving.
Lack of proper documentation and organization invites doubts. Often, you end up spending more for a particular thing, only to forcibly cut back on something else. The solution for this uncertainty is clear calculation. Due to this lack of calculation, people are forced to borrow money from family and friends. It only adds to the mounting debt, pulling you more and more into tensions. Living with a negative balance is more troublesome than living with a small positive one.
You cannot erase away all these mistakes by a magic wand. It takes time, practice, dedication and lots of trial-error experiments to devise the best financial style to suit your life. But at the same time, it is important to stay aware, avoid common habits and build a better foundation for the future. No one can take charge of your financial matters or save some money on your behalf. Avoiding common mistakes is the first step to ensure greater happiness, build a sense of satisfaction and enjoy peaceful family life. At the end, money is only the means and not the absolute whole in this journey called life.
