The world of finance, by virtue of its intricacies and complexity for the unprepared person, is no exception. Like any other sphere of human life, it is full of miscalculations, mistakes and annoying misunderstandings. And, no one is immune to them, to get caught in the trick of financial fraud or to make a mistake in calculating profits can even be a person competent in this matter.
Income and expense
Every month (or better once a week) you need to clearly record exactly what amount you received as a salary. It is equally important to always note what you spent money on. Thus, you will always know what your funds went to and can take appropriate measures, refusing unnecessary waste. But here financial mistakes have just begun.
It is this expense item that most often takes away most of your money. So, you saw an attractive advertisement for a new dress or gadget and immediately rushed to spend newly received money. And only then you understand that this purchase was not so necessary, and the spent finances could be found a much more rational application.
Neglect of insurance
Life, in general, is insured less than 2% of the population, although one of the most common causes of delinquency and non-payment of loans are just unforeseen expenses for treatment. Similar expenses for repairing an apartment, for compensating flooded neighbors from below, for restoring one’s own health care in most cases unexpected and require significant expenditure, to which not all are ready.
Beginning of retirement savings for a couple of years before getting rid of it
Pension as a financial goal is rarely seen by anyone, most of the population does not even think about it, postponing it for later. It is not necessary with the belief in a bright future to wait until the end of your work experience and retirement. It does not matter if you are 20 years old or 50 – start as early as possible to save some of your earned money and create your own accumulative capital. Begin at least 1-2% of your income and gradually bring this figure to 10-20%.
No personal financial plan
A personal financial plan is, in principle, a rarity. But its absence can lead to serious consequences. If a person thinks only about buying a car in a year, and buying an apartment after 3 years and paying for the formation of his son in 10 years, he does not plan yet, it may well be that he will accumulate the right amount for the car, but increased transportation costs will not allow the accumulate the amount of the initial installment on the mortgage.
Accumulation “under the mattress” instead of the bank
Less than 50% of the population uses bank deposits and up to 5% – are investors in the stock market. Very few people trust any financial instruments, preferring to store savings at home under the pillow/mattress / in the bedside table, etc. In fact, this kind of “investment” gives a guaranteed income minus 10-13% per annum. This is one of your financial mistakes.
Life on loan
Of course, why for several years to save for a car, if you can get it right now, just having issued a loan? However, the habit of becoming a debtor at any need sooner or later will lead you to a financial pit. To prevent this from happening, in addition to investment capital, it is also necessary to create a “safety cushion”. In addition, if necessary, you can take a part of this money (with the subsequent replenishment), instead of making financial mistakes, take a loan.
Wrong choice of profession
Statistics show that only about 40% of all people occupy a position that corresponds to their education. Of course, immediately after graduation, it is difficult to say with certainty that you will be more suitable as a profession. However, it is never too late to change qualifications or start your own business, especially if you have decided what you really want from life.
The pursuit of profitability
The risk-free return is higher than the interest on the deposit, does not exist. Therefore, income above 12-17% and 5-9% in currency is guaranteed to be associated with the risk of losing part or all of your savings. Therefore, seeing the announcement of a guaranteed yield above the interest on the deposit, it is better to bypass this company side, because with a very high probability it will be a financial pyramid.
So, if you invest for the purpose of saving for some important goal in 1-3 years, then it is better to prefer bank deposits and highly reliable bonds or bond funds. If you talk about the goal in 3-10 years, then, in addition to deposits and bonds, you can add up to 50% of shares or stock funds to your portfolio. Well, if you invest for 10 years or more, you can increase the share of shares to 70-80%. The goal should have a time, cost and priority. Only by clearly defining it, you can save your life from any financial mistakes.
The overwhelming majority of people believe that any accumulation is completely useless: you will lose everything anyway – so why save if you can spend everything now and buy some necessary thing? Perhaps for a specific moment of life, this decision may seem right, but after a while, you may need some amount for unforeseen expenses: minor repairs in the apartment, or paying for medicine, or raising the rent, or delaying wages. The loan may not be issued, and it often takes several days or even weeks to receive it, and you may not have that time. That is why it is important to remember the first rule: you must always have an accumulation in the amount of 3-6 monthly expenses for an. You alone need to learn to avoid your financial mistakes.