There are many money common mistakes that have being made and have in turn caused detrimental effects on our finances. We all have been guilty of it at one point or the other, but if we want to gain mastery over our finances and make money work better for us, it is better to learn on avoiding these mistakes.
A leading online travel agency known as Jumia Travel shares 5 common mistakes made by people when they travel.
- Spending Money You Don’t Have Yet: While you desire to get something for yourself, you might be tempted to splash on one or two things, telling yourself you will replenish it with your next income. However, when the income comes, you quickly realize other pressing commitments in which you must take care of. Ultimately, you end up being broke after overspending till the nest paycheck comes. The result of overspending puts you in a tight corner and a very uncomfortable finance situation in the meantime. You might even end up meeting friends borrowing money in order to make ends meet and you end up in a serious debt. You can only get out of this unless you are disciplined; making necessary sacrifices to get out of it.
- You Forget That Small Purchases Lead Up to Big Expenses: There is a saying that little drops of water makes an ocean, meaning your little spending here and there amounts to a big expense. Spending N200 here and another N300 for another desired thing might not seem like such a big deal at first especially when on a vacation. Continuous spending like that in a week, would amount to a rough sum of N2000 – N3000 much more than that which you have budgeted for. Though little but would be significant if the spending continues like that for a month. Attention needs be given to little spending and if not one will be surprised at just how big they can become.
- Emergency Fund Not Kept: Inevitable times will come, so do well not to make the mistake of not keeping this fund as they can leave you completely destabilized if not adequately prepared for. Therefore, it is best to have some money kept in an emergency fund account which you can fall back on when emergency comes knocking. However, if emergency never occurs, you would have saved a significant amount of money that you can enjoy or invest wisely in order to make good returns.
- Habit of Spending More Than You Earn: This is a bad spending habit and should be curbed. The principle is you either spend less than you earn or you earn more than what you earn. Your expenses shouldn’t be equal to your income or even exceed it as some money should be kept aside for other expenses and/emergencies. Spending more than the earned income leads to debt and this affects this next income. Spending as much as you earn or spending more than income are inconvenient ways to live. Being disciplined is an importance in spending that cannot be overemphasized and necessary sacrifices or lifestyle changes should made in order make your spending be aligned better with is earned.
- Allowance for Entertainment Spending: You should endeavor to keep money for entertainment as this is inevitable and must be disciplined enough to be strictly adhering to. You need to understand your entertainment needs and also set up a budget based on understanding in order to create an efficient budget for this expense. Then, discipline comes in to help in determining things you can do without and the things you have to also do without because you can’t afford them. If settled, you can then comfortably set aside an average range for your entertainment expenses that you are more likely to obey.
Ignorance is a Killer, I want to be sure, with this information, you just got more enlightened as to how to manage your money and finance better?
Kindly share with friends.