Handling your money right is the most important exercise to develop. Now that you're moving into a different realm, you need to furnish yourself in your career and begin with the corporate ladder or making your way as a future millionaire.
There is already too much going on, and financial stability is on top of every human mind around.
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Think of this article as a route or guide to help you bypass those monetary gaffes in your journey.
1. Credit Card Debt
Credit cards can feel like a solution at the moment of your impulse purchases but ask yourself that can you afford it? Will the next paycheck be enough to pay it off and bear your monthly expenses? Credit card companies make their money off of your financial mistakes and buying things you don't need in real life. Their infamous interest rates and hidden rules in their fine print can make you fall behind.
2. No Side-Hustle
Employment and relationships are treated equally. We are faithful to it, pouring our time and effort into establishing ourselves in our primary place of work. But when it comes to making more money, it's okay to have something on the side! It gives you a backup in case of an emergency or if you find yourself out of your primary income source, you can make more money to invest and save for future projects.
3. Delayed Retirement Plan
You might think it is too early to think and start on retirement, but your 20s and 30s are the best time to grow your nest egg. It would be best to take full advantage of your employer's plan. Take out your time to start investing in your portfolio. The earlier you start, the more wonder of compounding you will witness: Make your money work for you in this powerful way.
4. Housing Overspend
Imagine how extraordinary your life will be when you start living in an apartment on a riverside or how expensive you would feel to live in an upcoming neighbourhood. Three out of five Indians make this mistake and spend more than 30 percent of their income on rent. Don't fall into this overspending trap and derail your money on rent and instead, invest in buying a house you can call home.
5. Not Buying Insurance
We all will meet our demise one way or another. Take this as a friendly reminder that there is no time like the present to make estate plans and purchasing life insurance. The younger you are, the less you'll pay. Jump on this bandwagon while you still can for yourself and your loved ones.
6. No Fund for Rainy Days
You may be feeling okay right now, but at this point, you never know when you may get sick or hurt. The majority of people don't have enough savings to cover months, let alone years. One can protect themselves by purchasing long-term disability insurance, which can cover your payment while still, you can focus on getting better. Think of it as a protection against selling your investments or dipping into savings you worked so hard to contain.
7. Overspending on Kids
There will be a tiny person in your life for whom you will do almost anything to ensure their safety and happiness. While there is an itch to provide the absolute best of everything, from top to bottom but a word of caution here, check your spending before your money disappears into a puff of toys, gadgets, and baby accessories. Ask yourself, does your bouncing baby need that fancy stroller? Or wouldn't it be more fruitful if that money went into an investment fund or savings account – or went to pay off debt? Don't let emotions rule your purchases, for a baby or for you.
8. Short on Savings
Keeping a sock for your retirement is good, but are you saving something for your upcoming expenses? For that new car, your first home – every goal comes with a price tag - big or small. Make multiple savings accounts to start setting aside money for those purchases. Have this money come out through automatic transfers, so you do not miss it.
Read more: Save For All Your Life Goals with Wizely
9. No Financial Plan with your Partner
It's no shock that people do not wait longer to get married, and they start living together before testing out the waters for long-term companionship. It all sounds lovely until there is a plan to split the bills. This conversation may feel awkward to start, but it's essential to understand where you both are financially and how your habits may differ. Being on the same page will keep money conflicts from overshadowing and affecting your relationship.
10. Overspending on a Luxurious Lifestyle
Are you too caught up with the quote "keeping up with the Joneses."? If yes, you have entered a path that is not sustainable and doesn't result in long-term happiness. Trying to live someone else's standards will not help you achieve your dreams. You will get there, too, if you keep your expectations in check and don't spend beyond your means now.
11. Conservative Investment
You have about 30 years till your retirement and then another 20-30 years to live in retirement. Being conservative in your investments because of inflation will erode your purchasing power over time. Make a balanced portfolio of 60% equity and 40% fixed-income investments to earn a blended return of between 6-7%.
12. Competing with Everyone
Trying to match someone else's lifestyle when you have a different career and savings plan is unrealistic. Comparing yourself and your assets to your friends and family is equally dangerous. Not everyone has the same financial obligations, which is your separate journey. Enjoy it.
13. Not Following a Budget
You cannot make important life decisions like what kind of car you can afford or how much vacation you can spend without knowing where you stand today. Creating a budget and following it can help you evaluate it and help achieve your goals within your timeline.
Read more: Why Is Budgeting Important? 5 Key Benefits
14. Celebrating Too Often
The most common and unintentional mistake one can make. The fear of FOMO is real but getting caught in the game of trying to keep up is worse because even if you win, you lose – from a financial standpoint. Work on your social contacts but with less expensive activities.
15. Not Consulting a Professional
Do you want to start a business or own a second home? Think about the lifestyle you want to have in the future and during retirement. Do you have a plan to achieve it? Taking a professional's help can prevent you from making the mistakes we discussed above. Take this as an intelligent investment in yourself and your future.
Work on your financial life in your 30s so that you can reap the benefits in your 40s and live a comfortable life in your 50s.
(Check out 'Learn & Grow with Wizely' 'to read and learn all about personal finance and financial planning.)