Money Mistake #1: Living beyond your means
Antidote #1: Spend way below your means. Stop overspending.
It’s simple math. If you earn a thousand bucks, you don’t spend all. Worse, you don’t spend more than that.
Overspending leaving nothing is the top reason why people can’t save, much more invest. The worst that can happen is for these people to be heavily indebted in the future.
Picture this: A manager who earns 40,000 bucks and spends everything versus a clerk who earns 10,000 and saves 20% monthly. Who do you think will live a financially liberating future?
Money Mistake #2: Living without a budget
Antidote #2: Stick to a realistic budget.
Are you living paycheck to paycheck? You should learn to make and stick to a budget – a realistic one.
You want to take control of your money, right? Then you have to plan where it is going. It doesn't need to be complicated. You just have to know what works for you. One of the easiest budgeting methods is the 50-20-30 Rule. It means 20% is saved, 50% is for essential expenses and 30% for other expenses.
You can write it down or use an app like Mint.com. Track down your expenses. You can even cut non-essentials and simplify your life. After a while, you will notice a more disciplined you when it comes to spending. Never underestimate the power of small change.
Money Mistake #3: Investing without Emergency Fund
Antidote #3: Build your Emergency Fund before investing.
As its name suggests, Emergency Fund is money for emergency use. Emergency, for this matter, can take the form of an illness, death of a family member, job loss, home repairs, and other unexpected expenses.
How much should you set as Emergency Fund? Well, financial experts say it should be 3-6 months’ worth of your living expenses.
It may sound cliché, but we must expect the unexpected. And expecting it with a handy Emergency Fund is a good thing. At this point, you can start your investment portfolio without worrying where to get money in times of emergency.
Money Mistake #4: Mindlessness of the future
Antidote #4: Get Healthcare Plan. Seek Insurance Policy. Draft your Will.
Are you too optimistic of your health? You think you’ll not get sick in the future?
Let’s face it, as we age we become more susceptible to health problems. Thus, when sickness hits you, how do you pay the bills? As early as now, you should have healthcare plan and insurance policy for your loved ones not to fret when the unforeseen happens.
It's hard to escape illness the same way that it’s impossible to escape death. We will all die one day. But are we ready for what that day brings? A Will, be it holographic or notarial, can help you manage your property after your death. You can write there your sentiments and instructions. You can give loved ones their specific shares (provided they’re not contrary to law). It can be an instrument to a peaceful settlement of your estate.
Money Mistake #5: Seeking advice from wrong people
Antidote #5: Learn from the experts.
If you’re seeking advice from wrong people, it means you’re not getting ahead. And if you dwell in that situation, you’ll not reach your financial goals. Hence, when you know where you want to stand in the future be sure to learn from the experts. They will certainly help you get there.
Drop shortcuts. Ask investors, financial advisers, businessmen and other successful people. Listen to what they say. Read articles about stuffs. It pays off to get advice from people who really know their field. They won’t be successful for nothing.
