Identifying Common Financial Mistakes To Avoid It

If you take a survey on people, you will be surprise to find most of them are financially illiterate or has poor financial IQ. I hope this post will enlighten you and help reduce your chances of making common financial mistakes. Lack of financial knowledge is exposed and reflected in the beginning of costly money mistakes such as:

✓ Spending excessively and accumulating consumer debt: Too many young adults leave home being experts in spending without having learned much
about living within their means and saving and investing. Many things may tempt you — the never-ending stream of gadgets and electronics, cars, restaurants, bars, nightclubs, new clothing, concerts, sporting events, and so on. Check out my post about reducing your spending on items you don’t need (coming soon).

✓ Defaulting on loans or other debts: This problem is often the consequence of the preceding problem of spending too much and accumulating too much debt. Being overwhelmed with debt, which may be exacerbated by a job loss or unexpected expenses, can cause folks to fall behind on their loans or other debt payments. See my post on paying down debts (coming soon).

✓ Experiencing failed relationships that damage your credit rating and financial health: You know what they say about love being blind sometimes, right? Well, one of the things many twenty-somethings don’t think about when in a relationship is how the things they’re doing are going to work out or not work out should the relationship fail. Sharing bank accounts and bill paying may not present glaring problems when everything is going well, but you can quickly end up with a tarnished credit report should your love boat run aground. See my post about relationships and money (coming soon).

✓ Falling behind on tax payments and violating tax laws: Filing your annual tax return and making quarterly tax payments if you’re self-employed aren’t enjoyable tasks. In fact, you may find these chores downright intimidating and stressful. But if you fail to complete them correctly, or complete them at all, you could get socked with hefty interest and penalty charges and possibly do some jail time in the worst cases. Check out my post for a complete discussion of paying taxes(coming soon).

✓ Making poor investments: You work hard to earn money and then to save it. So you should do your homework to ensure that you invest it well. Don’t rush into making an investment you don’t understand because you have a lot to lose. There are plenty of slick-talking salesmen who will sell you an investment that helps to line their pockets but not yours. You also don’t want your money sitting around for years on end in a low interest bank account, which is what happens to folks who don’t know how to invest their money. Check out my post for more in-depth information about investing your money (coming soon).

✓ Neglecting to secure proper insurance coverage: Most people, especially the young ones, don’t spend a lot of time thinking about risks. After all, most teenagers and twenty-somethings are healthy and energetic. So things like health insurance or disability insurance seem unnecessary and for older folks. The good news is that insurance costs less when you’re younger because you’re less likely to suffer a major illness or disability than someone decades older than you. Check out my post about insurance (coming soon).

✓ Being taken and duped by biased and/or shoddy advice: Many companies and people have something to sell. Some of what they’re selling is good stuff, much is mediocre, and some is downright awful. You don’t need to pay high commissions or end up in the wrong type of investments or insurance.