“ To err is human”. It is a universal truth that none of us are perfect in one or other sense. As a result knowingly or unknowingly we all make mistakes relating to various facets of our life. But if we are cautioned on certain mistakes beforehand, I am sure each one of us in our capacity will try hard not to make those mistakes.
Here I am not going to lecture around on the common mistakes of life like a religious preacher but will restrict myself to highlighting some common mistakes which pertain to our core subject of ‘Money Matters’.
Money on the one side is the most desired commodity in today’s materialistic world, while on the other hand, it is equally difficult to manage money.
A slight slip on our part in managing money can cause enormous financial damage to our lives. During many of my past published articles, I have mainly concentrated on the positive aspects of money management. But today I have decided to put before you some negative aspects of money management which if avoided will boost your money power.
Though the list containing common mistakes in money matters could endlessly be long, for today’s article I have short-listed some key mistakes as follows:
(1) Spending more money than you make – this is one of the gravest mistakes in money matters, as we end up spending more money than what we make.
In such a situation our outflow of money will be greater than the inflow and that being the case, there will be a deficit situation. So one has to look for additional sources to make up for the deficit, which is nothing but leading a person towards borrowing, which will put an additional burden on the available inflow.
Remember to live a financially responsible life – meaning you’re living within your means. That is, you’re not spending more money than you make. For many people, it’s a lot easier said than done. Using credit cards and easy loans allows you to buy more things than your income will allow. That kind of lifestyle isn’t sustainable, and, at some point, your debt will become too large to pay. When that happens, you’ll be forced to make some important changes or face financial ruin.
(2) Stop relying on Credit Cards – using credit cards is not living within your means. When you plan your budget, completely rule out credit cards as a way to make both ends meet.
Credit cards are unreliable since your credit card company can decrease your credit limit or even close your credit card at any time without warning. Save up for purchases instead of putting them on credit. People often use credit cards for large purchases they can’t afford to pay outright, like a new television, fridge or car. Instead of paying for these purchases on credit, put aside some money each month until you’ve saved up enough to buy it outright. If you can’t afford to save up for the purchase, then you can’t afford to buy it.
(3) Using credit when you have cash – one of the quickest ways to get into a debt trap is to choose to use credit when you have the cash to make a purchase. People do this with a “something for nothing” type of mindset. They want to receive the goods (or services) but they don’t want to pay for them. The convenience of leaving your money in your wallet comes at a cost. Chances are, if you don’t want to pay for it today, you’re not going to want to pay for it tomorrow.
(4) Using debt to pay off debt – when you use credit cards to pay off other cards or take loans to pay off other loans you’re not paying off anything. You’re just shuffling your debt around and incurring more debt each time you do so. Balance transfers have transaction fees, and most loans have some kind of down payment or origination fee. So when you use debt to pay off debt, you end up worse off than when you originally began.
(5) Temptation to buy things you can’t afford – resist the pressure to have the same material things as the people around you and even the people on television. You may be able to use credit cards or loans to fake wealth for a short period, but you’ll pay for it later, and you’ll end up paying more.
The list of such common mistakes on money matters does not end here, but somewhere I have to end my article. The only thing which remains to pen down is – be cautious, avoid making silly mistakes, behave sensibly and rest assured, you will never feel the shortage of money in your wallet.