6 money mistakes to avoid at all cost

6 money mistakes to avoid at all cost

With wage stagnating, rising inflation, rising cost of housing and healthcare, all putting a squeeze on most people’s living budget. With this in mind, these are the 6 mistakes to avoid at all cost if you want enough money saved to pay for higher education or to retire at the age of 65.  Sometimes we do not make the smartest decisions with our money. To build a financially viable future, we must make smart money decisions. Here are 6 money mistakes to avoid at all cost:

1. Getting into debt

Consumers at all income levels are better off if they avoid debt like the plague. You don’t derive a single benefit from carrying credit card debt – only added costs, debt, and stress. We are all guilty to carry debt by choice from our credit cards. One strategy is to set your credit card debt to be paid in full every month, so you do not accumulate debt.

2. Set aside emergency funds

Lack of emergency savings is a real problem, set one up now. You never know what tomorrow can bring – old fashion thinking but it works. Set up an emergency fund that can carry you through for 3 to 6 month period because bad times will inevitably occur.

3. Plan your retirement

To retire comfortably it requires patiently and consistently investing on it with the addition of boosting your retirement fund when you have a pay raise.

4. Delay retirement plans

A frequent mistake many people make is to delay saving for retirement, prioritising other financial obligations. It’s easy to fall into the trap of thinking it’s ok to start saving after paying for a house, kids education and pay off students loans. While all these are worthy financial objectives, it remains important to start putting even if a small amount of your finances toward your retirement and take advantage of compound interest as it will have an impact at retirement.

5. Do not forget to assign beneficiaries on your retirement account

If you have already assigned beneficiaries, do update them often. Life happens, marriages, divorce, deaths happen and with them come changes, so it’s wise to revise your retirement beneficiaries. You don’t want your saving to wind up in the wrong hands.

6. Avoid sunk costs

Investments such as expensive cars, which are sunk cost, where your investment is going to suffer a drop immediately after you drive the car out the salesroom door. Cars are an investment that depreciates rapidly, avoid such investments. Instead, buy an older car and invest the rest of the cash you were going to burn in a luxury car on something that will give you a return.

H/T Business Insider