These mistakes are very generic in nature. The important ones have been listed below. Improve on these mistakes and it will help you lead a financially balanced and prosperous life.
- No proper budget: Your budget is your key to financial prosperity. Not many people actually have a budget. Merely making sure all of your bills and expenses are paid off every month isn't a budget. A budget is a financial plan that includes all your incomes and expenses. You need to track where your money is going on a regular basis. This will help you develop your financial goals.
- Excessive spending and no saving: You usually get tempted with the luxuries of life and postpone your savings all the time. It may seem a mere thing when you pick that double cheese burst pizza, stop for a pack of cigarettes, going for a latest movie, but every little item adds up. Minimum of Rs 500 per week spent on dining out costs you Rs 26,000 per year, which matters a lot.
The truth is even saving Rs 1000 every month will help you build the first block of savings. It will provide you the cushion during the time of financial hardship.
- Living on Credit Card: You borrow money assuming you will repay in future. Many young professionals that begin their career make the mistake of using a credit card too often without taking in the consideration that at a later date, the user will have to repay that money with an interest.
Using your credit card for expenses like this is a terrible financial move. Interest accrues month after month on any balance that is left unpaid. Unless you can pay your balance in full each month, do not use your credit card. Credit card interest rates make the price of the charged items more expensive. Depending on credit card can make you spend more than you earn.
- Not having adequate Insurance: Some people consider insurance premiums as waste of money. Be over insured can be a waste of money but having adequate insurance can save you from financial disasters.
Imagine you hit some one's car and you are at fault and you don't have any third party insurance, your liability can imbalance your finances. Not having adequate life, health and vehicle insurance can have serious consequences. Insurance is not going to increase your wealth, it provides protection. With the right amount of the right type of insurance you can reduce risks and ensure that your family will make it through tragedies like accidents, illness, or death.