MONEY MISTAKES

Money, one subject most people do not like to talk about except it involves how to make more of it and not the parting with it. Money is hard to come by but it is easy to part with. Life is hard but one can afford financial freedom only if they check their spendings especially those of us who don't get paid hourly but monthly. The take home pay doesn't even get home before it is completely spent. Yeah! Spending money is way too easy but do you know it is also very easy to save money?

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All you need do is change some spending habits and inculcate some financial discipline. You do not have to be an accountant to be able to come up with a great budget and analysis of your income and expenditure. When you are spending more than you are making, you are bound to find yourself swimming in debt. This is why it is important you penny-pinch yourself and learn to stick to your budget. We all have shortcomings when it comes to managing finances. Identifying these mistakes will help you control your future.

Here are some of the money mistakes we make:

1. Taking a loan to start a business with the mindset of paying back with the income. Money borrowed always acrues interest and no matter how much feasibility study you did, the business will surely need sometime to stand and while it is going through that phase, using the little income from that business to pay off the interest of the loan will end up crumbling your business.

2. Spending money you are yet to receive: so many people make the mistake of making plans on a money that is not yet physical. Some go as far as borrowing or buying things on credit based on a promise of money that may never come leaving you in debts.

3. Keeping up with friends: leaving a lifestyle that is not real just because you want to roll with a particular set of people or keep up with friends will leave you drowning in debts. Don't try to match the lifestyle and possession of people around you. Life is no competition. Be independent minded, create your own lifestyle.

4. Not tracking your expenses: while this might sound like you becoming a little strict with your money, it is a necessary evil. Money spent on little indulgences accumulate over time especially when they become habits. You can gratify yourself once in a while but at the end of the day make a list of what you spent money on and be conscious of how much you take with you while going out the next day to avoid some of these indulges.

5. Not having a saving plan: money is sweet to spend and it finishes as fast it comes. Dont make the mistake of planning to save after you are done taking care of your wants and needs. Bad news, these needs and wants never finish. Once money comes, take out a lil percentage and save either in a bank, a piggybank or an investment club. You never know when you might need it.

6. Lending out money you are not willing to lose: we would always have that family, friend or colleague that is in dire need of financial assistance. If you must lend, lend out an amount you know you are wiling to lose should they refuse to pay. Most borrowers find it so easy to borrow but difficult to pay. You wouldn't want that to affect your relationship with such person.

7. Buying almost everything new: it's great to have brand new electronics, furniture, jewellery etc but there are always great deals for fairly used products and some of these products work well as new. There are somethings however that must be bought brand new.

8. Standing as a guarantor for someone on a financial matter: it is great to help a friend just sign some papers to get a loan but are you willing to pay that loan on their behalf when they default? Always make sure when standing as a guarantor, it is for a sum of money you would be able to conveniently pay should your friend decides to abscond.

9. Borrowing to buy stuff that lose value. It is a financial offence to borrow money to buy goods that will lose value in the long run. Things like cars, video games, jewelleries etc depreciates in value over time. I'm sure no sane person would be comfortable going into debt for an investment that may fluctuate in value.

10. Do not keep huge amount of money not intended for immediate use within reach. There will always be expenses and emergencies. Keeping such money within reach means spending it all before you realise it.

11. Not differentiating between your wants and your needs. Your needs are more important than your wants. Your needs includes water, food, shelter, clothing. These are important and must be catered for. Your wants are just the extra frivolities that you believe makes life better. If you can distinguish between the two, it will help you have a better control over your finance. Treat yourself to some wants along the way, only if you can afford to.

12. Not taking advantage of your free time to earn extra income: some of us spend so much time doing nothing. We spend a lot of time paying video games, chatting and on social media, activities that do not add one cent to our account and these activities gulp money because you need money to be able to afford them. Instead of wasting such time, divert them to extra things you can do to earn income like online jobs, blogging, learning a trade etc.

13. Not taking calculated risks: It is not every opportunity you jump at. Always weigh the financial implications, the pros and the cons of indulging in such before deciding if it is worth investing your money. You do not want to end up in regrets if it all goes south. Although some risks are worth it like relocating to the metropolitan with better job opportunities and career advancement.

Come up with a plan and work on it. Instead of leaving yourself feeling deprived, make yourself feel capable by avoiding these little money mistakes.