It’s time to be open and honest about your finances.
The list of things to undertake when trying to maximize your financial resources appears never-ending. But we frequently forget that there are a number of choices and actions we may make that could negatively impact our financial stability.
These choices, whether we make them consciously or not, have a big impact on who we are. Some may result in short-term financial setbacks, while others may have a lasting impact on our financial situation, which can be disastrous.
In this article, I will cover some financial no-nos and suggestions for better behaviour, and believe me, you might just figure out where your money issues have been.
What's in this guide?
1. Never live above your means
One of the fundamental principles of wealth accumulation or wealth building is living below your means. Saving and investments should rather be your priority so that you can build for yourself an enviable retirement plan.
Despite how obvious it seems, most people frequently ignore it. Developing the habit of living above your means is one of the easiest ways to go from being wealthy to being in debt. Planning your finances is necessary to prevent this. Automating your account is among the best ways to go about doing this.
You must have a fixed-income retirement plan, an investment plan, and a savings plan. And thanks to automation, as soon as your paycheck is deposited into your account, it is immediately divided among each of these accounts based on the amount or percentage you have agreed upon with your account officer. Then you get what is left over for your monthly expenses.
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2. Never confuse liability for asset
Understand how inflation and depreciation affect the pricing or worth of things, and make a distinction between assets that will appreciate and liabilities that will depreciate.
Never spend your money on a liability thinking it is an asset. Almost all cars and those expensive gadgets are considered high-cost liabilities.
3. Never Spend your money without having planned a Budget
Without a budget and a. Well planned financial accountability, you may end up living in deficit even before the next paycheck..it’s advised that you have proper planning and budgeting of your money before spending. This will help you to avoid impulse buying and wasteful spending.
4. Never cash your paychecks at once
If you Withdraw all your paycheck right away, you might end up spending all of them at once too quickly. You should rather plan with your employer to transfer the money into your bank account, and then have a system with your account manager on how to spend and manage the money.
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5. Never spend your money on things you may never need
More often than not, we buy things that we may never need. Sometimes it may be due to peer pressure. At other times, it may be a result of your wrong judgment of how important the item was to you at that time. One thing that becomes so glaring at the end of the day, is that you realize you have wasted your money.
So the advice is no matter how you feel whether as a result of peer pressure or not, you must consider thoroughly how the item might be of help to you, and if the logic behind the intended purchase is not strong enough, you should rather abandon it.
6. Never shop or spend when you’re emotional
It is best to refrain from making purchases and going shopping while you’re feeling down. Because in order to feel better, you could be compelled to spend more money and buy unnecessary items. At that time, you should also be extremely cautious of salespeople who can try to take advantage of your situation by pressuring you to buy more with the argument that you deserve more and happiness.
Instead of going over budget, which could result in a deficit or force you to incur more debt on your credit card, there are other ways to improve your mood.
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7. Never invest in what you can’t afford to lose
Most wealth creation principles require that you make investing in stocks, mutual funds, bonds, etc a priority. But you should know that investments come with risk, and that’s why you must seek a financial expert before investing.
However, the general rule states you must not invest more than you’re ready to risk. So never put your money meant for something important or imminent implementation into an investment portfolio.
8. Never hire a financial expert you can’t trust
Financial experts or advisors help you make informed choices on investments and other financial decisions. However, investing your money in a financial advisor you can’t trust becomes a red flag.
9. Never buy a house without considering the net cost
Although purchasing a home may seem like a fantastic option, you must investigate any potential additional costs. People frequently focus only on the actual cost of a home and ignore potential supplemental expenses. such unpaid power bills, regular maintenance, and repairs that are required. Before making the final payment, make sure you conduct a complete background check.
10. Never invest in a business you don’t understand
Most people have lost their finances because they invested in business opportunities they never understand. Most investment opportunities may come with a very high ROI just to get the unassuming.
Understanding the risk involved with a particular product or investment is very necessary for making an informed choice. You must be very careful and avoid the Ponzi scheme. Wealth creation requires time and dedication, and there are no quick fixes to it.
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Having said all, the most important decision you can make is to be intentional with your money. Make wise financial decisions before you spend. And most importantly, when it comes to investments, seek the advice of financial experts to aid you in making informed decisions. Having known all these, the ball still lies in your court to become disciplined and prudent concerning your finances.