Some formal financial planning can help avoid a lot of mistakes.One sure thing about life is that it presents you with plenty of opportunities to make mistakes. Now, there are mistakes and there are Mistakes. Making a bad choice at lunch just means you have a meal you don’t enjoy or maybe a jittery stomach for a few days. Financial mistakes, on the other hand, can have a great impact that lasts for years. There are as many mistakes as there are couples, but some are more common than others and there are some Worst Financial Mistakes that one must avoid in life.
Worst Financial Mistakes to avoid in life
We make financial mistakes or decisions which can be leading to a financial mistake in life from our high school life step out time. So here by taking into account of the top financial mistakes which are regarded as worst mistake by financial experts to the common financial mistakes that is encountered by most are going to be highlighted .
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Never stepped to College to Save Money
Swear me guys its the first mistake you are doing if you are not having a potential to be independent . I mean we know some great inspirations who never stepped into college and are not even high school completed people but are on top of the world. You can follow them but make sure you are going to be your own boss else the money you save by not going to college is a lifetime loss for you.
It will be a loss because if you are not a graduate your average starting salary will be very less and getting into a good job becomes tough. You have to avoid this Worst Financial Mistakes is your life for sure as the consequences of this will be sometimes not just financial but also personal.
2. Too much Time lag in Paying off student loan
One common financial mistake that can happen when you are a student is delaying your student loan . You can make it slow but not too slow in the process . One economic analysis of this can be a person who just got into a job is likely to spend much on comforts than paying off student loan . You can relate this action with life cycle theory of consumption in economics where the consumption will be relatively higher than saving in the starting stage and at the retirement age. So it is a financial mistake that a student can do by not paying off the student loan at the early . If you are going to do this Worst Financial Mistakes then you have to move many years with your high interest student loan.
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3. Too quick Student Loan Pay off
Now after reading the second mistake i pointed out here you may think what is the right decision about student loan . Simple neither pay too fast nor delay it too much . Give student loan the necessary importance only. Some financial advisers opine that a saving is must from the initial stage else meeting out an unforeseen event will be tough .
4. Not Having a co-signer on student loan
Being independent shouldn’t mean you should ignore the little dependency that can avoid unwise financial mistake. When you make your parents a co-signer for student loan you have lot of benefits in this process according to many financial experts .
5. Over Spending
You shouldn’t go for bills that will burn your ass for a month . So you should spend only on what is necessary not a lavish spending to demonstrate others . Unwise decision of overspending is another top financial mistake almost all end up doing in at least some point of your life.
6. Making use of the Maximum Limit of Credit Card
We have to think whenever taking credit , we may have a great limit given on our credit credit . But you will be doing a worst credit card mistake by using maximum limit as you are the one who have to bear the interest and pay it off . So do use only the credit facility which you really require .
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7. Living a life by means of Credit
Some common mistake is do live beyond your means and people do it by making credit and it just pile up with interest rate . This is going to dwell you into a great financial burden in life which you can’t survive when you can’t live life by your means as all will be for settling credits. It is life ruining Worst Financial Mistakes that one do in their life for sure.
8. No Health Insurance
Health is wealth , we all know that but hardly we understand its depth . Even if you are averagely well settled still a disease can drain your money because we can’t be miser in spending for our good health and recovery . So if you fall sick and doesn’t own a good health insurance you have to meet all the bills from your savings or by any means . Its a risky financial mistake one do it in life . You are risking both your money health and wealth in the same time by ignoring the importance of a health insurance.
9. No life insurance
Your life is precious and those who mean to you as life is still more precious . So the best financial decision is not to make your loved ones to lose hope after your life . If there are people who depend on your income then taking an insurance is best thing you can do. As life has no guarantees and warranties but Insurance companies gives some guarantees and warranties to you. If you have no insurance then its a worst financial mistake you do by risking your dear ones also.
10. No retirement Plan
After your kid’s are being settled in life is the time most couples think about a saving for a retirement plan but financial experts says that its a bad financial decision to take in life as you should start thinking about your retirement plan at even from 20s if possible at least by 30s you must have one retirement plan this will help you to get additional benefits .
11. No investment
Saving alone can’t be an ideal financial management way . Ideal money has no use in your future so you have to avoid that financial mistake in your life . Think about early investment plans according to your needs so you can get good benefits from your savings . But investment should be done after a good research and don’t delay your investment it be again a Worst Financial Mistakes because the market changes every time which crucially affects all sort of investment plans.
Read Also : Short term Investment Plans – Pros & Cons
12. No diversification on investment
Worst financial mistakes most of them do in life is investing everything into one source. What happens when you do this is that suppose if its going to be loss you will suffer a great loss but in the case your diversify your investments then there is likely balancing between your profit and loss . Diversification is a method to avoid and reduce the risk so you have to do it wisely.
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13. Following traditional investment psychology
There are few people who go behind investment plans like black sheep like their parents did but the time and market is on a great move. So come out of that else it will a Worst Financial Mistakes that you will be doing in this generation.If you can’t identify yourself one then go for a financial adviser who will help you with right investment procedure.
14. Not having a market knowledge
You want to invest and you are going to invest tomorrow . This will be seriously pulling your leg as you are doing a Worst Financial Mistakes without any idea about the market condition whether it is a profitable time of investment and what can be the predictable market condition at the time you nee back your investment and return . You must be aware of the market condition and then only take your decisions.
15. Not covering your backside
So, what’s your plan for emergencies? If the first thing that comes to mind is borrowing from mom and dad, you have a problem. Having a supply of ready cash for unanticipated expenses does wonders for your peace of mind. If you can’t manage that, have an “emergencies only” credit card or line of credit. Talk to your financial adviser for some blunt truth about your insurance situation. If you don’t have enough coverage, an accident or illness could leave you or your significant other destitute.
16. Not Saving enough
Lack of savings is another result of falling to the Worst Financial Mistakes. Most couples want to retire some day, without their lifestyle taking a big hit. If you don’t know how much money you’ll need for that to happen, talk to a professional. The answer might be a real shock to you, so be sure you’re sitting down. Putting aside enough money to retire comfortably, pay for your kids’ education and deal with life’s emergencies along the way is a major task. The sooner you get a reality check and put a plan in place, the better you’ll do.
17. Late settlement of credit card bills
When you take credit card debt you must be very careful about the pros and cons of credit cards . When you do not settle your credit card debt then your interest rate will even increase to 30% when you delay it much.
Also this will affect your credit score you must have a healthy credit score to get loans easily. So try to avoid doing such a worst financial mistake in life.
18. Taking Risk beyond your capacity
Whenever you take a financial risk make sure that it is something that is under your control and even if it goes wrong its at you level of affording . Many people lose the control of life by taking financial risks that is beyond their limit to meet which is a Worst Financial Mistakes.
19.Not Paying Taxes on time
Paying tax is really a benefit to you in all ways but keeping a tax debt is really a Worst Financial Mistakes one do and it will be inflating so the risk you take by making tax debt is really serious than you could ever imagine . And by not paying tax you are not able to find the fruitful benefits you get as a tax payer also.
20.Lack of a good budget plan
Whether it’s a country or a company or a family everything can be met out only with a healthy budget plan. So a very good financial budget that covers a savings and a source to meet any other sudden expenses must be essential . If you don’t have a good budget plan then its a worst financial management way you are doing .
21. No additional Income opportunities
As we hear the news of alarming rate of job cut down in different industry . You cannot rely upon one job and its income to run a smooth financial situations in life . You must always have additional income opportunities to support your finances at any time.
22.Trying Too Hard
For some couples, the shoe is on the other foot. Perhaps your parents drilled fiscal responsibility into you, or you grew up poor and swore your life would be different. Although it’s a laudable ambition, beware of trying too hard. If every penny of your income is accounted for and allocated, you probably haven’t built enough “give” into your budget. Remember, life is short. Salt away as much cash as you need to, but keep out a few dollars for fun. It will help keep your stress levels down, and you’ll enjoy your life more.
23. Carrying Too Much Debt
Some debt is necessary in life. For example, your mortgage makes it possible to live in your home while you pay it off. However, a great deal of consumer debt is unnecessary. If you’re carrying credit card balances from month to month or paying stiff financing charges on your latest purchases, it’s time to take a hard look at your spending. Consumer interest rates can suck you dry over the years, sapping countless dollars from your long-term goals. Set yourself a goal of eliminating unnecessary, high-interest debt by a specific date, and then make it happen. One day, your 401(k) will thank you.
24. Not Planning
This is one of the most important financial mistakes people make, and it’s often the root of many others. If you have no clear plan or direction for your finances, even a high income won’t necessarily mean a secure future. Talk to your sweetie and hammer out some financial goals. Settle on a strategy for saving, paying the bills and still having a few dollars to call your own. Talk to a professional planner, ideally a fee-only adviser who doesn’t sell individual products. Expert knowledge can maximize even a modest income, reducing your tax burden and improving the return on your investments.
25. Spending too much on Home and car
When buying a home first think about the space you really need and give some space for your desire . But don’t go for making large square feet homes for a small family size to show off people .Have a look on the ideal checklist of buying first home to make it smooth process. Because your home loan is to be paid back with interest and same in the case of car that new models arise every month so trying to afford the best each time will end up as worst financial mistake of life
These are the common Worst Financial Mistakes that people do in life which should be avoided for a good financial stability in life.
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