We have all been there. Don’t worry, not all can be Mr.Warren Buffet to understand the nuances of money before we hit puberty. We all make some financial blunders. Most importantly, learn from from them instead of being bogged down.
A great human once mused “Learn from the mistakes of others. You can’t live long enough to make them all yourself” For some reasons, I have been in absolute love of this quote ever since I laid my eyes on them. I thought maybe before we get started, if I can share some of the common financial blunders, you might steer clear of a few. I would be glad if I succeed in saving you from repeating them. So here goes,
Right from our childhood, we have been taught to protect our wealth. We toil, we earn, we save & we spend. What we fail to understand is that how we save really matters over long run. One of the most common and dangerous financial blunders we do is to be over cautious. Dangerous ramifications ensue if proper exposure to your hard earned money is not in place. Don’t just save, invest your money. Let it work for you.
We are always wanting something or another, right? When our wishes come true, we crave for something else. We go on and on like this our whole lives. But the hard truth which we must accept is, that not all wants can be satisfied. We must accept if our wants are kept out of reach from us. However, we succumb to our urges and make the mistake of letting our emotions run wild and buy whatever we crave for. If you cannot resist it, just don’t be impulsive about it. Plan your purchases especially if its big. For example, a simple plan before buying a car helps you significantly save. Start small and always plan before you buy.
If you want something, you have to go for it. You have to work for it until you finally achieve it. Expecting results by doing nothing is the biggest among all financial blunders. You can’t expect returns just by parking your funds somewhere and forgetting about it. Periodically review your investments. Passive investing doesn’t mean invest and forget, it means invest and don’t meddle with it frequently, review it once in a while. Your money won’t always multiply just because you’ve put it somewhere for 10 years. If only it were true, huh?!
Fortunately, we are living in an age where changes happen overnight. Earlier, we could communicate only if we were in the same room. Then came mobile phones. A couple years back, we had no choice but to physically attend the school. But now, things have changed, haven’t they?
When some elders are advising you, always take it with a pinch of salt. Let me be very clear, the intentions are never in question, but analyze them before heeding to them. What worked for them, might not work for you. Maybe there are better options out there they just aren’t aware of. Best case example, investing in FDs and RDs are very commonly doled out advice, but you would amazed how risky it is in your long term wealth planning.
You can’t blindly trust on any advise. Sometimes, you just might know better than them, if you can do some research. Never react without realizing what’s happening now. It is important to be in the present and make your own decisions. Carpe Diem, right?!
We live in strange times where everyone’s after instant gratification. When it comes to investing, one of the biggest financial blunders people often make is to be impatient. It is important to wait. You must be persistent and should never give up if things take time. One cannot be impatient and expect quick results. We all know the famous quote, right?!
Having said that, don’t misconstrue patience as acceptance to failure. It will come back and hit you very hard. Having conviction is very important. Do as much research as you possibly can before investing. Once invested, unless the reasons why you invested change or something terrible has happened to the company, have patience and believe in your decision making.
You should always keep your money set aside for a specific purpose and try to use it only for that purpose. Never use it for anything else. Especially if its for your retirement. We all have this mirage that retirement is eons away. But, it comes sooner than we anticipate. Every single financial planner worth his salt strictly advises you to start investing early for retirement. If you have started doing it, great! Now, by all means avoid dipping into it. Because once the faucet starts leaking, before you know the tank ends up empty.
As we began this article, our intention is for you to know where most people are going wrong so that you can avoid these booby traps. Remember this, it is okay to fail. The trick is to fail quick and fail cheap so that you can move on. Never be overwhelmed by it, we are sure you can have a successful personal finance if you can keep calm and stick to a process you set for yourself.