Here we’ll take a look at some of the most common financial mistakes that often lead people to major economic hardship. Even if you’re already facing financial difficulties, steering clear of these mistakes could be the key to survival.
Mistake No. 1: Living Paycheck to Paycheck
Many Families are living paycheck to paycheck, and an unforeseen problem can easily become a disaster if you are not prepared. The cumulative result of overspending puts people into a precarious position – one in which they need every dime they earn and one missed paycheck would be disastrous. This is not the position you want to find yourself in when an economic recession hits. If this happens, you’ll have very few options.
Many financial planners will tell you to keep three months’ worth of expenses in an account where you can access it quickly. Loss of employment or changes in the economy could drain your savings and place you in a cycle of debt paying for debt. A three-month buffer could be the difference between keeping or losing your house.
Mistake No. 2: Not Investing
If you do not get your money working for you in the markets or through other income-producing investments, you cannot stop working – ever. Making monthly contributions to designated retirement accounts is essential for a comfortable retirement. Take advantage of tax-deferred retirement accounts and/or your employer-sponsored plan. Understand the time your investments will have to grow and how much risk you can tolerate.
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Mistake No. 3: Excessive/Frivolous Spending
Great fortunes are often lost one Naira at a time. It may not seem like a big deal when you buy a pack of Pizza every day, have dinner out or visit the Cinema every day, but every little item adds up.
Just 2000 Naira per day spent on dining out costs you =N= 60,000 per month, which could go towards a wonderful online business idea that would yield millions for you within 6 months. If you’re enduring financial hardship, avoiding this mistake really matters – after all, if you’re only a few Naira away from being broke. Every Naira count, so you should make good use of it.
Mistake No. 4: Not Having a Plan
Your financial future depends on what is going on right now. People spend countless hours watching TV or scrolling through their social media feeds, but setting aside two hours a week for their finances is out of the question. You need to know where you are to know where you are going. Make spending some time planning your finances a priority.
These little mistakes usually result in a large number of people becoming broke virtually all the time. There are countless of them, but unfortunately, I can list out everything. It takes financial wisdom to make the right choice.
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