Are you aware that some costly money mistakes can go undetected?
Personal money management may appear like a no-brainer topic. Unfortunately, when taken for granted, the mistakes you make unconsciously may prove costlier than ever imagined.
Here are three costly money mistakes that most people gloss over:
Costly Money Mistakes: Living Paycheque to Paycheque
The Signs…
- You are in survival mode
- non-action gets you to the bottom
- Instant gratification can lead to long-term pain
You may wonder when did being comfortable become a costly money mistake? Look at this scenario: you go on a three-day camp, pitch a tent, and spend day one incidence free. Day two passes just as smooth – you go to sleep. Then in the middle of the night, you wake up, and all you see are stars above – no tent! Are you still comfortable?
Living Paycheque to Paycheque has ‘comfort zone’ written all over it! You can afford anything you want. You get used to your monthly income – nothing seems to bother you. You have money and do not care what anyone tells you about preservation and growth.
A comfortable life is what most of us crave; however, being comfy does not mean the absence of uncertainty. A little wisdom to guard against uncertainty does you a world of good.
A paycheque-to-paycheque lifestyle results in what has come to be known as a financial rat race – therefore, if you lack preparedness, you are courting disaster.
How to prepare: Set up an emergency fund and get insurance.
Costly Money Mistakes: Greed and Fear
From a distance, greed and fear do not appear like costly money mistakes! Who does not want more money, or who would risk losing all their money? When Greed and Fear fuel your emotions, you might find yourself plunged into costly money mistakes.
Greed tricks you into feeling like you are out of time, while fear supports it by telling you that you will miss out. When a proposition of multiplying money presents itself, the underlying emotion is greed. On the other hand, fear cripples you from taking decisive action or even motivates you to seize the wrong one! The desire to multiply and the fear of losing or missing out are the factors that deliver people into the hands of scammers.
If these emotions are left unattended, they can harm our financial adventure. The fear of missing out on a ‘sweet deal’ that offers a double your money opportunity could end up as a self-inflicted scam!
During tough times, people tend to seek alternative ways of making money. Crisis periods present scammers an opportunity to prey on unsuspecting masses. They set up pyramid (get-rich-quick) schemes to recruit their prey.
Be wise: If the deal sounds so sweet, think twice, do your due diligence and invest in financial literacy.
“Don’t Gain The World & Lose Your Soul, Wisdom Is Better Than Silver Or Gold.” ― Bob Marley
Costly Money Mistakes: Failure to protect your greatest asset(s)
“Money is always eager and ready to work for anyone who is ready to employ it.” ― Idowu Koyenikan
What does it mean by your greatest asset? It is the fuel that runs your income engine – you. Your income is what enables you to purchase the other assets. You are the most valuable of all the assets at your disposal – if you are not there, the assets do not exist! In the event you lose the ability to generate cash flow, you may not be able to meet your current living expenses or even support those who depend on you.
We live in a fast-moving world that exposes us to many risks. Uncertainty does not announce when to happen. Should it happen while you are unprepared, chances are; you will be at a financial crisis crossroads. A healthy person is privileged to make and spend money, while an unhealthy one only attracts expenses.
Tip: Evaluate your insurance covers; Life, Health, Income and other possessions.
Take away
These are not the only costly mistakes – there are other money pitfalls. Other examples include; poor record keeping, lack of planning, opportunity costs, debt traps, etc. For a sound money management strategy, invest in Financial Literacy to create a sure way of being in charge of your money. Where necessary, consult a trusted financial adviser to work with you.
