Having regrets is a normal part of life. Maybe you regret not talking to your crush in ninth grade or you regret not going to prom. Everyone will have some regrets in life. But when it comes to money, there are some regrets you never want to have to face.
There are certain money mistakes that one made, especially in your youth, that can make it nearly impossible to succeed financially. But luckily, in this article, we will share with you 25 Biggest Money Mistakes You Must Avoid at All Cost | How To Be Good With Your Money. So you can grow old and be regret-free.
25 Biggest Money Mistakes You Must Avoid at All Cost | How To Be Good With Your Money.
Mistake number one, thinking college/university will make you rich.
If you’re like the average South African teenager, then your life path has already been set for you. You’d be expected to get good grades in high school to be able to attend a good college/university. You work for 40 years, but likely more, and then you’ll retire. And hopefully during this time you will have enough money to buy a home and go on a couple of vacations.
The sad reality is that most young people don’t realize that college truly isn’t a path that will reliably make you rich. And to be honest, them having this perspective probably isn’t their fault. In fact, we should blame society for this. You see, your education actually truly starts the day you leave school. You may not like to hear this, but it’s the truth. The real world is very different from the four walls of a classroom.
Truly successful people are people who learn daily, even two decades after they’ve left school. They know that simply getting the education that college/university provides will only offer them the ability to work a routine job that will never pay them enough to get rich. The rich identify early on that they must pursue skills outside of formal education to get ahead financially.
Unfortunately, most people stop learning that daily school, and that’s a big mistake that leads to poverty and an unfulfilled life.
Mistake number two, not doing your own research.
Young people are those who will sculpt and shape the future world we live in. They are people with great minds are full of opinions, but they will rarely challenge what they hear from their elders.
For instance, they take money-making advice from their parents who have never earned a six-figure income, or they take business advice from those who have never run a business that turned an annual profit.
Your earlier years should be a time of learning, but also questioning what you are told and even getting deeper into your own best thoughts and viewpoints. Experience may lead you to discover that issues that seem black and white are actually many shades of grey. With age doesn’t necessarily come wisdom and many young people to easily accept what they hear from older generations.
Following your instincts can take you a long way if you know how to follow them.
Mistake number three, spending unnecessarily.
When you’re young, your main priority is having as much fun as possible and let’s call it like it is. Having fun often costs money. Whether it’s going to the bar with your friend or going on vacation.
Money is almost always involved. And we think it’s good to live it up, especially when you’re young and have the time and energy to be adventurous. But where the youth and most people in general go wrong is by behaving this way on an ongoing basis.
Many people feel a constant need to live like the people they see on social media. Those who drive fancy cars were expensive clothing and live a life that is unattainable for ninety nine percent of people.
In an effort to emulate these individuals, useful people try their best to obtain the material goods that their role models possess, like the newest phones and gadgets.
And all this is really doing is making them poorer than they already are.
As a young person, your primary assignment should be to build a solid financial foundation for your life. To do this, you have to have the habit of saving and learning about investing.
You can buy everything and anything your heart desires, but that’s after you’ve built wealth. We know this advice is unappealing to hear now, but it will be worth its weight in gold when you start to see your net worth exponentially rise in the future.
Mistake number four, giving up too easily.
It’s so easy to just quit when something feels too hard. It could be a tough class in college, a significant other you’re in a relationship with or starting your first business.
The idea of giving up what you’re doing just to try something else can often be the easier option. It might be that you don’t like what you’re doing, but the biggest mistake you can make in most cases is to give up. Pushing through the hard times is what makes a stronger and well-rounded person when things start getting a little tough.
Don’t take the easy way out. Keep on pushing through and you might surprise yourself when you work. Through something tough and come out the other side, there is no better feeling. Don’t give up, keep on fighting.
Mistake number five, investing blindly.
] If you’ve been reading our articles or listening to any proper financial advice, you will know that it is important to start investing early.
And it’s true, investing can be a very rewarding endeavor. But it’s not as easy as buying a few shares you think will do well and collecting your profits. Whether you’re young or old, you must always do your research when making any type of investment.
If you want to invest in shares of a company, you need to learn to read financial statements, understand financial ratios and at least have some knowledge about the business the company operates in. The same goes with real estate.
You must know the demographics of the area in which the property you want to buy exists. Trends in rent and vacancies and how interest rates change can impact your investment decision.
Put simply, you need to do your research before investing. If you truly want to master investing, the best way to go about it is to buy some really good books on that subject and talk to those who have invested successfully in the assets you are looking to obtain.
This way you can save yourself the heartache and disappointment that comes with losing your hard earned money.
Mistake number six, needing instant gratification, requiring instant gratification.
Maybe the biggest deterrent in any young person’s life when it comes to achieving any type of success due to social media and the instant culture we live in. The youth are not willing to be patient to see their efforts through until the end and want the results they seek immediately.
Now, don’t get us wrong, we completely understand why people feel the need to get instant results. Young people today are under great pressure to establish their successful careers as soon as possible and to find the perfect partner at the earliest opportunity and most importantly, to enjoy themselves right here and now.
They always want everything now, and that usually leads them into unnecessary shortcuts, debt and an unhappy future chock full of regrets.
Mistake number seven, not saving any money for retirement.
Your retirement may seem far off, but you’re doing yourself a major disservice if you don’t recognize the importance of saving as soon as possible.
Unfortunately, like we said earlier in this article, young adults often feel an immense pressure to fit in with their peers by buying the latest gadgets and the newest clothes.
Each one of these purchases pushes them further and further away from retirement. And as a result of what’s known as hyperbolic discounting as humans, we are hardwired to prefer short term payoffs even when we would get more by waiting.
However, these purchasing decisions will be regret’s down the line, which is why you should avoid this type of spending when you can.
Mistake number eight, not preparing for emergencies.
When you’re young, you never envision anything going wrong. Maybe it’s because you haven’t experienced many tough times in life and you are full of energy every single day. However, the reality is that rainy days will come whether that’s mentally, physically or financially.
Not having the money to address unexpected events is something you want to avoid at all costs and is definitely a regret. Those who don’t invest in their emergency funds will face as soon as you start to earn an income.
Allocate at least five to ten percent of your income to an emergency fund so that you can avoid any regrets that will be attached to future unfortunate events.
Mistake number nine, buying too much house.
Buying your first home is one of the most exciting events in your life. However, it is probably the biggest financial outlay you will ever commit to. And many people overextend themselves and buy more house than they need and realistically can afford. Don’t buy any home just to show off to your peers.
Buy a home that works for you in terms of its size and cost. At the end of the day, you carry its financial burden, not your friends and family. So this should be a decision you make for your own ultimate benefit.
Mistake number ten, blaming others for your lack of success.
When things go wrong in life, it’s easy to point the finger at others and direct blame their way when in reality you should be pointing the finger at yourself. Just because you went to a party with your friends instead of studying doesn’t mean the C plus you got on your exam is because of them.
Just because you spend two hundred thousand rands on college/university because your parents forced you to go doesn’t make it solely their mistake. You are. Ultimately, in control of the decisions you make and accepting responsibility for your actions is essential to having less regrets as you age.
This also works in a positive way as well. It means picking the career you enjoy and not the one your parents expect you to enter into. It means being OK with being selfish, with your time when you were driving towards your goals, when you look in the mirror. You only have yourself to answer to at the end of the day, which is why you must blaze your own path and avoid blaming anyone but yourself.
Mistake number eleven, Getting Behind on Your Payments.
When you fall behind on your house or car payments, you can create a cycle that is hard to break. You will end up paying late fees and other charges each time you fall behind. It may also damage your credit score, which can affect your finances in the future.
The first thing you need to do is catch up on your late payments and then address any spending, budgeting, or income issues that have caused you to fall behind. Then work to stick to your budget so this doesn’t happen again.
Mistake number twelve, Using Credit Cards for Everyday Expenses.
When you use your credit cards to cover the shortfalls in your spending, you can run up a huge amount of debt in a really short period of time. Plus, studies have shown that people tend to spend more money when they are paying with credit.
It’s also easier to stop paying close attention to your budget when you constantly fall back on your credit card. You need to stop using your credit cards and start following a budget to kick your credit card habit.
Mistake number thirteen, Borrowing Money.
When you are in a tight financial situation, you may be tempted to borrow money from your friends or your family. When you do this, you put a strain on your relationship with them. They may begin to question your financial decisions and feel like they can make comments about your spending habits.
They may also need the money back suddenly or you may feel guilty whenever you see them. It’s a good rule of thumb to avoid loaning money to family or friends or risk damaging the relationship.
Mistake number fourteen, Quit Your Job Without a Plan.
When you quit your job, you do not qualify for unemployment insurance, and you may find yourself in a very tight financial situation. It is also more difficult to find a job when you are not currently employed.3
When you feel that your current employment situation is not good, you should begin looking for a new job right away. This will allow you to find a new job and prevent any gaps in your employment experience.
You may even decide to take a pay cut for your new job, but you will be secure in knowing that you have a job and a paycheck coming in.
Mistake number fifteen, Staying at a Dead End Job.
Another big financial mistake is choosing to stay at a dead-end job. This can hurt you financially because it does not give you room for advancement or to increase your earnings. While you may take a job as a stepping stone or because you are desperate for work, you do need to have a plan to move on to a better job.
You need to determine when the time is right to find a new job, as well as the skills that you will need to find a job better suited to your interests. Begin the process before you are ready to leave your job. That way you are prepared when the time comes.
Mistake number sixteen, Not Budgeting.
When you do not have a budget, you do not have control of your finances. Failing to budget month after month means that you are not taking control of your financial situation.
Without a budget, you can make decent money and still struggle to get by. It can be difficult to reach your financial goals when you do not have a solid budget in place. Take the time now to set up a budget, and continue to do it every month.
Mistake number seventeen, Not Having a Financial Plan.
When you do not have a financial plan, you will not move forward to reach your financial goals. Your financial plan can help you make sure your spending matches your priorities.
Your financial plan will help you decide when you should start investing your money, how much to save for retirement, and other financial goals. Take the time to set up your financial plan today.
Mistake number eighteen, Not Setting Goals.
Similar to a financial plan, your financial goals give you steps to work towards. These goals should be things like homeownership, starting your own business, retirement.
If you do not set specific goals, you will flounder. You may never get to the point where you have a down payment save for your home or be in a good position when it is time to retire. Take time to set solid financial goals and review them each year.
Mistake number nineteen, Going Without Insurance.
Many people choose to go without insurance to save money. But this isn’t a wise financial decision. That’s because your car or health insurance is your safety net. It protects you in the event that you’re in a major accident or have to deal with a serious health issue. In fact, one study found that 530,000 bankruptcies each year can be attributed to medical bills.
Mistake number twenty, Making Financial Choices Out of Fear or Pressure.
Another common mistake is to make a financial choice when you are afraid or you feel a lot of pressure to act right away. When you are afraid, you may not be considering all of the options, and you may end up making a costly mistake. It is important to take a step back and consider all of your options. You may also want to talk the decision over with someone you trust.
Another financial mistake is to give in to pressure to take a big financial step, like buying a new car to purchasing a home to getting married or having a child. You may not be ready for these steps and giving into pressure will not benefit you financially.
Mistake number twenty one, You enjoy frequent shopping for retail therapy.
Mistake number twenty-two, You never read the fine print.
Mistake number twenty-three, You spend more than you make.
Mistake number twenty-four, You are dependent on one source of income.
Mistake number twenty-five Staying loyal to expensive banks.
Staying loyal to banks should be a thing of the past. Never assume that, just because you’re a long-time customer, you’ll be getting the best deal on offer. More often than not, it’ll be the exact opposite.
Some banks offer great cash rewards and interest rates on savings for new customers, so it’s definitely worth shopping around if you think you could get a better deal.
If you found this article to be helpful, you can learn more in a follow-up piece titled “20 Money Traps to avoid” or Discover How South Africans Are Drastically Reducing Their Debt & Becoming Debt Free!
WhatsApp us Here