6 Common Money Mistakes People Make

For a lot of us, we struggle to attain that level of financial freedom we’ve always dreamed of. It’s not as though we don’t make money, either from our career or through other means, however, this money doesn’t stay once it comes.

Most of us continue to make these money mistakes, unconsciously, I might add. But the fact is whether these mistakes are made knowingly or otherwise, they are unforgiving and will render you bankrupt or put you in a constant state of penury.

Here are some common money mistakes you should know and avoid to be free:

For a lot of us, we struggle to attain that level of financial freedom we’ve always dreamed of. It’s not as though we don’t make money,  either from our career or through other means,  however, this money doesn’t stay once it comes.

Most of us continue to make these money mistakes, unconsciously,  I might add. But the fact is whether these mistakes are made knowingly or otherwise, they are unforgiving and will render you bankrupt or put you in a constant state of penury.Here are some common money mistakes you should know and avoid to be free:

1.You Spend More than You Make

A lot of us are guilty of this. We end a certain amount but spend way more than that,  sometimes before we even get paid. This happens because we are either trying to keep up with the Joneses or haven’t quite mastered what we really want.

When you spend more than you make or earn,  you aren’t just unable to save,  but will always be a leg or two in debt,  struggling to leave the rat race but unable to.

2.You Don’t Have a Savings and/or Investment Account

You’d be amazed at the number of people who do not have a savings or an investment account. Money earned is never enough, but this is where discipline comes in and we should be disciplined enough to keep a certain portion in your savings account and asset aside another to be invested. Only then can you grow your finances to the extent you want.

3.You Don’t Draw the Line between Needs and Wants

We all have needs and wants. Our basic needs are food, clothing, and shelter in that order and these must be met. However, when we fulfill these needs, we are able to concentrate on less pressing needs, and then move on to our wants.

To be financially free, it is important you identify your needs clearly from your wants and prioritize. Draw a up a plan that works best for you. It could be striving to meet 80% of your needs and 30 -40% of your wants. Whatever you do decide, ensure you have something leftover at end of the month to put away in your savings or investment account.

4.You Don’t See the Need for a Budget

Working with a budget is boring,  but it does come in handy. A budget helps you avoid unnecessary spending. I have gone grocery shopping a few times without a budget and run out of cash before I even covered half the things I planned on buying. Now I always go with one and only buy extra when I cover everything on my list and have some change left over from discounts.

5.You Lend Money to Family or Friends with a Collateral or Proper Written Agreement

Hard as this sounds, lending money to family and friends is like throwing money away sometimes. A lot of the times,  these ‘lendees’ capitalize on the relationship you both have and don’t bother to pay back.If you must lend money to friends and family,  let it be an amount you can afford to lose if they don’t pay back. If they insist on a higher figure,  you should go professional and let them sign the appropriate documents. This might not go down well with them at first,  but I find that if they direly need the money,  they always come back in the end and everyone ends up happy.

6.You Invest but Do Not Diversify Your Portfolio

For a lot of people, they invest, but put all their money in one basket so to speak. Putting all you have in one investment channel is highly risky and you stand to lose all if it goes down.

You should share your money into two or more portfolios to minimize this risk and also increase your chances of possibly earning more.