The truth is that we can never be completely content with our financial life because it is in man’s nature to wish for more. Thus, there is no such thing as perfect financial planning. Even though you cannot have the perfect financial life, at the least you can make the right and prudent decisions to avoid massive financial mistakes. This way you can lead a regret-free financial life. Here is a ready list of top 5 massive mistakes that can brutally destroy your financial life.
Depend on Company Health Cover
Life is unpredictable and in today’s world medical facilities are very expensive. One disease can literally drain out all your life’s savings in one go. Large chunks of the world population are salaried and probably have their company offering a health cover. Depending on company health cover heavily is a brutal financial mistake. You must be wondering that when your company is already giving you a health cover why you should unnecessarily invest in another. Well, first of all the health coverage that your company is offering you may or may not be enough should you ever need it; secondly since you will switch companies from time to time looking for career advancement, you will witness that different companies may be different in terms of the amount of health coverage they offer and some of them may not even offer you one. Life is uncertain you never know what will hit you medically or financially. Hence buying good health coverage for you and your loved ones is essential.
Credit Money or Loan Addiction
In today’s world, you can buy almost everything on an EMI and at very low-interest rates. The EMI option has become so accessible that people have started becoming heavily dependent on loans. A credit card in people’s pocket has given rise to a false perception of purchasing power. Credit cards come with an illusion that you can spend more than you can actually afford. Hence you end up making unnecessary, unwanted and avoidable expenses. Every time you swipe that credit card or take a loan from the bank always remember that it’s not your money and you are liable to pay it back someday and at an added cost called the interest rate. So technically you end up paying more than the actual value of your purchase at a later date. Taking Home Loans and Car Loans are feasible long-term options these days but you can always restrict yourself from buying something unnecessary at the mall with a credit card or taking a personal loan to take a vacation. Being heavily dependent on credit and loans will drain your income and savings if you have any. Remember loaned money is loaned life, hence don’t buy the things you don’t need, otherwise, someday you will have to sell things you actually need as Warren Buffet has rightly said.
Overspending Because Of Social Pressure
As a financially prudent individual, you must understand the length and depth of your pocket. A lot of people believe in showoff and practice the same to portray that they are more successful than they actually are and end up buying more expensive houses, and cars than they can really afford. People also spend thrice the amount of their earnings and savings combined in marriages in the name of trying to look good and fulfilling customs. Under the pressure of relatives and society, people indulge in overspending. This kind of overspending is not only a brutal financial mistake; it is fatal for your financial health. This kind of spending can erode what can be your retirement fund and bad weather money. It is time to rid yourself of such social pressure because ultimately your retirement fund and financial future is your responsibility and nobody else will fund it for you. The bottomline is that nothing should impact your spending decision except for your own opinion.
The Startup Mindset
Owning a successful business and a large income generating enterprise is a brilliant dream but a dream come true for a few. Hence whenever you think of setting up your own business, or have a brilliant startup idea, ensure that it is financially feasible and whether or not it is healthy for your financial health. Jumping into entrepreneurship without any homework is a massive financial mistake. Business is about taking risks hence, you should never mix your business journey with personal finance. A startup idea is good only with solid and thorough groundwork otherwise it’s just a bad financial decision that will majorly impact your income and savings.
DIY Is Not For Everyone
Sometimes a bad financial mistake can be to listen to yourself. Do-It-Yourself Portfolio management requires a high understanding of the subject, advanced decision-making skills and a lot of time and passion. Not everyone is cut out to do it all by themselves. Like a good athlete needs a good coach, you need an expert financial advisor. In the world of internet and information readily available on Google, people have a tendency to research a little and consider themselves qualified enough to challenge professionals who burn their blood day in and day out in the field. Money doesn’t come easy hence paying a proficient individual who not only knows the craft of money management but has also mastered the skill is a prudent decision to make. DIY investing and portfolio management can become brutal financial mistake if you cannot judge your risk appetite.
Like they say it’s never too late and its better later than never, you must embrace your financial mistakes so far and make fresh financial commitments right from today. A good financial decision today is a great life tomorrow. Everyone should make persistent efforts towards developing financial awareness and consciousness to avoid making brutal financial mistakes, secure their financial future, and live a financially healthy lifestyle.