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“Success is walking from failure to failure with no loss of enthusiasm. “ –Winston Churchill
Excessive and Frivolous Spending
“We buy things we don’t need, with money we don’t have, to impress people we don’t like. – Dave Ramsey”
It can be tempting, especially now that technology has made it easier to access stores and buy online just one tap on add to cart, check out, and boom! Your wallet went dry. Most of us, if not all, become impulsive buyers seeing all those promos, discounts and buy one get one.
Lifestyle also plays a vital role. Young adults tend to have the mindset when there is an increase in earnings, living expenses also increase, and wants becomes more thought of than needs. An increase in pay shouldn’t increase your cost of living; however, most people feel that they should reward themselves once they get paid. Instead, focus on the significant ones rather than immaterial things.
Keep your spending within your means and keep saving, investing, and budgeting in mind. Create a budget plan; this will help you monitor your cash flow and expenses. Allocate budget for your needs before your wants; you will better understand where your money goes in and out.
Never-Ending Payments
Having a credit card is indeed attractive. But not knowing when to use it and how to use it can become your worst nightmare.
Subscriptions, memberships, music services, or cable televisions are the most common expenses you can easily tie up to your credit card. These can make you pay increasingly for more benefits and leave you owning nothing, just momentary leisure. Having a tight budget or your income is just enough for your needs, you might want to start saving it more. Choosing a leaner lifestyle can help fatten up your savings and cushion yourself from financial hardship.
“The chains of habit are too light to be felt until they are too heavy to be broken.” – Warren Buffet
Buying a New Car
The “No money down” deal is one of the most accessible money traps to fall in. Most buyers are drawn into this, thinking that they can take home the car right away; however, this is where the problem comes in. Being able to afford the payment is not the same as being able to afford the car. You may be burning through money if you buy a car without thinking through the entire cost.
But if you need to buy a car, do the math and put in at least a 30% down payment. It will make your payments easier and have shorter years to pay. Also, consider buying the practical ones, the ones that are just right for your needs. Cars that use less gas and cost to insure and maintain than large SUVs, which cost a lot more.
Relying only on One Source Of Income
Money is a two-way street – income and expenses. And most people are solely relying on their work income. Instead, think of money more dynamically. Even industries tend to get disrupted, and you cannot rely on that single skill that brings you your livelihood.
Having multiple tricks up your sleeves to get your world going. First, you can find a side hustle. Starting a small home-based business can be a good start, or find a second or third job – a man with many hats but only do so when you’re clearly up for the challenge. You can also start investing in passive income.
Failing to Plan For Emergencies or the Future
Your financial future depends on your current state. People spend countless hours watching movies or scrolling through their social media feeds, but setting aside hours in a week for their finances is out of the question. Know what your goals are and where you are going. So spend some time planning your finances a priority. It’s normal to feel still like you’re invincible when you’re younger, a little wiser, but still, you are impervious to disaster.
You should take responsibility for your life’s unexpected nature and build in monthly savings towards an emergency fund as early as now. You can use this for your future endeavors, perhaps having a family on your own, sending kids to college, or retire young. Whatever it is, it is best to start planning your financial path.
References:
https://entrepreneur-360.com/most-common-money-traps-to-avoid-in-your-20s-and-30s-689https://themakingofamillionaire.com/10-money-mistakes-you-must-avoid-at-all-costs-63f0b8d4fd95https://www.investopedia.com/personal-finance/most-common-financial-mistakes/