Most people, including the best among us, are prone to making poor financial decisions at some point in our lives or the other. We tend to make purchases, lend money, or keep borrowing without thinking of the long-term implications our decisions have.
This leads to many problems. Bad finances make us suffer emotionally, mentally, as well as physically. It can lead to bouts of depression, break up family structures, encourage separation, and promote substance abuse.
In this article, we list down the top seven financial mistakes, which you need to, start making. This is not only going to improve your life but also have a positive impact on everyone around you.
7 Financial Mistakes you need to stop making: The List
1. Borrowing money and getting into Debt-
Asking your parents, or your colleagues, or even your friends and family might appear to be normal, but it is not. Borrowing money is a psychological problem, which enables our minds to think that we can do so whenever we are in a problem. This builds up tension, makes us lose our self-respect, and fosters low confidence.
2. Not having a Financial Plan-
Most of us are guilty of not having a financial plan to help us tide over problems and issues. This means that we do not save, or invest or even cut down on unnecessary expenditures when we should. This exposes us to many financial problems and takes a toll on our mental health. Prioritizing expenses, keeping a tight hold on savings are some great financial planning options.
3. Lending Money to people who claim to be in need-
Lending money is a habit, which is not only bad for the lender, but also for the one receives it. This promotes dependence and unhealthy financial habits. According to estimates, 50% of all money lend, never comes back to the one who lends it. It is the worst form of investment you can make. As a lender, you also justify pushing the person who is asking for money into debt.
4. Spending money on a new car-
Do you know why great investors like Warren Buffett always drive around in simple cars? That is because they know that buying a new car is the worst investment you can ever make. A car depreciates by up to 50% in value as soon as you drive it out of the showroom. It is always better to buy used cars or use public transport or even pool together.
5. Not making the right investments-
People should realize that savings and investments are the foundation of a successful financial life. With new and exciting investment opportunities, people should always be looking to invest to grow their money. You can invest in diverse areas, as now there are many options. You can look at bitcoin rush, real estate, precious metals, or any other opportunity of your choice.
6. Using Credit Cards blindly-
If there is ever a global fraud, which promotes financial impropriety, it is credit cards. They are a psychological financial tool that makes people dependent and stay in debt forever. Maxing out credit cards and having huge credit limits is not cool, rather it is foolish and immature. A credit card should only be used for emergencies and that too in a responsible fashion.
7. Building your life for social media-
While this point may be unique in many ways, people who are reading this will know about what I am talking about. Social Media is an evil of our times, which forces extra spending, builds peer pressure, and adds to unwanted stresses in life. People are so eager to show off their fake lifestyles on social media for acceptance that they take some very poor financial decisions.
If you are someone who has been making any of the above-mentioned mistakes, you should stop right now. If you know someone who is making the above mistakes, you should ask them to stop. Making poor financial mistakes grows on a person like a habit. If it is nipped in the bud, it results in a happy, contented and satisfied human being, living life in the best fashion possible.