Beware Of These Financial Mistakes that Will Cost You Heavily!

W e all have dreams of going big and becoming so rich that we don't ever need to check the price tag before buying anything. Even with the best intentions, it's very easy to get carried away and make financial mistakes that will cost you more than they will make you money. Of course, everyone makes mistakes and it’s a learning curve, but more than that, these financial mistakes will cost you both freedom and comfort. All that matters, however, is that you learn from them and don't make it a pattern. Here are a few of the most common financial mistakes made by people that cost them.

Budgeting 

One tragic mistake you could make is not budgeting. Having a plan for your money is crucial. Most of the people with financial issues will say the same thing, they had no plan for their money or failed to make a budget. This doesn't just include having a goal for your future but also includes how much money you will need for it and how you will manage it. Along with this, you should have a plan for how much you will need to spend monthly on rent, utilities, and bills. Especially if you’re in a tough financial decision, it’s good to have a plan for every penny you earn. Try the 50/30/20 rule for an organized budget plan. The rule is that 50% of your income will go to needs, 30% will go to your wants, and 20% to your savings. 

Insurance 

It's a very common misconception that insurance is nothing but a financial chore and unnecessary expense that you can do without. This is very incorrect. Insurance is a vital shield for you and your family to protect them from any mishap that may happen. In the case of a medical emergency, medical bills can easily destroy your finances without medical insurance to cover them. Likewise, losing one's source of income can be very dangerous if you don't have proper insurance that can protect you. For example, if the breadwinner of a family passes away, life insurance can keep them afloat until they can support themselves.

Extra or Excessive Spending  

More than often, people don't realize how much they're spending until too much time has passed. That daily morning coffee or online shopping may seem like just a few dollars but over time it accumulates to amounts that could've been used for better things. Especially if you're in a tight spot, you should always limit your spendings to things you need. For example, that 5 dollar daily Mcdonald's breakfast in a year will add up to 1800 dollars that could be utilized to pay off debt or installments. Now, this doesn't mean you should never enjoy yourself, the point is just to be mindful of how much you need to and can afford to spend. 

No Savings

Never find yourself living paycheck to paycheck. Where every quarter and dime is needed and one late paycheck could mean eviction. Any decent financial planner will tell you that you need to have enough money in a savings account that can cover you for at least 3 months in the case of an unseen emergency. For example, in the case of losing your job, the money you've saved could be the difference between keeping and losing your home. 

Many of the possible mistakes made are usually small things that are often overlooked but can be very disastrous. You need a budget and a plan. Using up your money with no clear goal is very dangerous and can cost you greatly. You need to be mindful of how much you have and can afford. Don't think of insurance as irrelevant spending, it is very important and can protect you in many ways. 

For example, medical bills could very easily throw you under, medical insurance will protect you from that. You also need to stop using up your money on things you don't need. Of course, be comfortable and live your life but make sure you prioritize your bills over your monthly mani-pedi. A savings account is also very crucial. In the case of an emergency, you need to have at least 3 months' worth of rent and utility money saved so that you do not end up homeless if you face a sudden loss of income.  

These were some of the most popular financial mistakes that will cost if you do not keep your eyes open about them.

• This post is tagged in:

• budgeting
• finances
• debt
• Paycheck
• Savings
• Financial decisions