Let me ask you a very simple yet important question.
Do you want to become rich and wealthy?
Invariably your answer to this question would be “Yes”.
As a matter of fact, each one of us wants to become rich and wealthy.
So when you have the passion and the urge to become rich and wealthy, what is the reason that is stopping you from attaining the goal of personal financial prosperity?
Well, there is no rocket science involved in answering this one.
You must know that Personal Prosperity does not happen automatically. It requires your persistent efforts and moreover, requires discipline on personal financial matters so that you ultimately achieve one of the cherished goals of life that is being rich, wealthy and happy.
In this context, you must make sure that you should not commit the fatal personal financial mistakes that can prove detrimental to your personal financial health.
So if you have not yet taken the road to personal financial prosperity, the reason is pretty obvious and clear, and that is you are making one or the other personal financial mistakes.
Here, we have highlighted and described 10 Personal Finance Mistakes that are usually committed by people and which delay their personal financial prosperity. You ought to avoid the deadly personal financial mistakes so that you too can live a wealthy and prosperous life.
10 Personal Finance Mistakes
1. Not Maintaining Budget
Budgeting is the core to personal financial freedom and prosperity. By not maintaining budget, you are making one of the fatal personal financial mistakes. Actually budgeting helps you to figure out how you would be spending your money in a given month. It helps you to chart out your expenses in various categories, so you exactly know how much money you are spending in each category. If you are overspending, you can reduce the amount in that category.
So by budgeting you can reduce your expenses and save money for future purposes. You must also know the fact that Budgeting is only the beginning. You have to follow it up so that you can adhere to your monthly targets of expenses and saving.
2. Not Saving Regularly
You should inculcate the habit of saving money and moreover, should save money on a regular basis. Rome was not built in a day, and likewise you may not going to become rich in a day. It requires your willingness to save money regularly. By not saving money regularly, you are losing out on a great opportunity of building a large corpus of money.
Every dollar counts so set a monthly target for yourself and begin saving money. Slowly and gradually, you would realize that saving regularly is important and would increase your monthly saving target. To help you save money, you can set short term saving goals. It may even be buying an iPad. You would feel encouraged to save more once you achieve your goal.
3. Not having Life and Health Insurance
The only cruelty of life is that it is not certain. Death, misfortune, illness, accident can happen any time. You have no control over it. However, Life and Health Insurance can take care of the financial fallouts arising out of untimely death or some misfortunate event in your life. After all, you have the responsibility of your family’s well being and have to see that they face no sort of financial problem. Life Insurance covers the financial risks arising out when you are no more. And Health Insurance covers medical and hospitalization costs. Not Having Life and Health Insurance you are exposing yourself and your family to financial risks.
4. Over Spending on Credit Cards
Credit Cards are a useful financial instrument as they extend your spending power, but not so when you take up to over-spending on your Credit Cards. That can lead to disrupting your monthly budget. When you over spend on Credit Cards, you are not in a position to repay the amount in full that you have used on your credit card(s).
You end up repaying minimum amount due on your credit card, which does not serve any purpose as financial charges and interest continue to pile up on your credit card(s). This is a financial burden on you and is hard to get rid of as you have your limitations in the form of earnings and other monthly expenses. So when you over spend on your Credit Cards, they become a money drainer and does not serve any good to your financial health.
5. Paying Late Fee
If you are in a habit of paying late fees, you are actually wasting your money. It may relate to the payment of electricity bill, payment of school or college fees of your children, credit card bills, insurance premiums, or may relate to some other utility payments. Late fees may attract interest, financial charges, and other extra percentage over the total amount due on a utility service. This can total to a large sum of money. There is no point in paying extra sum of money in the form of late fees. Actually you can easily save upon the late fees by paying your bills before the due date. By paying late fees, you are making one of the crucial personal financial mistakes.
6. Not Investing Regularly
If you desire of having a large corpus of money, you invariably require to invest money regularly. It is the necessary ingredient which gives you the opportunity to amass a large amount of wealth. If you do not invest money regularly, your invested sum remains stagnant, and thus you lose out on the opportunity to grow your money. You may choose any investment instrument depending upon your risk bearing capacity, but need to continuously and regularly invest your money in these streams of investment (like a mutual fund, stocks, bonds, ETFs, etc).
7. Not Having Emergency Fund
Emergency situation can arise any time and Emergency Fund gives you the capacity to fight against them. It may happen that you may lose your job, or might face an accident. In these sorts of situations, it is never easy to get back to track and be in the same financial position. Emergency Fund gives you the cushion so that you can easily overcome any financial crisis. Not having Emergency Fund means that you have no financial resources to rely upon and depend when an emergency situation strikes. Emergency Fund is vital when you aim for personal financial prosperity.
8. Taking Too Much Loan
There are numerous things and aspirations in life for which you require to take up loan so as to bridge the requirement of money and fulfill those needs and aspirations. But taking too Much Loan is not good. On the contrary, taking too much loan can break your financial backbone. You end in a vicious loop of paying up loan installments and are not able to save any money. So before taking a loan decide your priorities in life and take up loan when it is utmost necessary. Analyze your financial capacity of repaying the loan installments. One should only take loan when they are able to repay it in full and meet other monthly expenses and saving targets without feeling any sort of financial burden.
9. Investing without Researching
Another personal financial mistake is investing without researching. You must understand that investing money has inherent risks. Market conditions and business scenarios are not under your control. However, you can make sure that the money you invest have been invested in the right avenues which have the highest probability of giving you interest as projecting or promised in the agreement.
In this respect, the only weapon you have is to take on a full-fledged research before investing a single penny. After all, it is your hard earned money. So you should carry out research and come to a conclusion whether to invest money in a particular instrument or stay away from it. You can chart out the areas of research and seek answers before making the final decision of investing your money.
10. Not Saving through Deals and Discount Offers
Today shopping malls, supermarket, and the World Wide Web offer great deals and discounts on various products and services. Whether it is grocery items, apparels, jewelry, gadgets, accessories or any other item, they come up with attractive deals and discount offers by which you can save a lot of your money. Discounts and Deals turn out to be a splendid way to save money. You cannot do without shopping so why not use discount and deals and end up saving a huge amount of money month on month. Not Saving through Deals and Discount Offers is one of the biggest mistakes if you aim for personal financial prosperity.
So you see that if you want to take the road of personal prosperity and well being, you ought to avoid the above 10 Personal Finance Mistakes. Even saving few dollars in the beginning can encourage you to save a lot of money eventually. Thus, you need not make the above personal financial mistakes if you really wish to become rich and lead a happy and fulfilled life.