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What are common personal finance mistakes everyone makes? 

personal finance

Everyday people wake up, work hard for a better future, and strive to become wealthy in that process. But most of us are not aware of how to spend/save that money. Earning a big paycheck alone doesn’t necessarily mean you are rich. It’s what you do with the hard-earned money that makes all the difference. 

The financial mistakes people make when they are young often lead to struggle and hardship as they grow old. An unhealthy relationship with money can squander great fortunes. Most people make mistakes when it comes to money. They end up spending as it arrives, rack up huge credit debts, acquire more than they can afford, and most importantly, fail to plan how to spend their money. 

Making mistakes is not wrong but being aware of it first leads to better financial habits in the long run. Let’s look at some of them.

Five most common financial mistakes everyone makes:

  • Spend More. Earn Less. 
  • Investing in a house.
  • Abusing Credit.
  • Not Availing Insurance 
  • Lack of financial goals.

Spend more. Earn less:

Most people have trouble limiting their spending because they are constantly running on the never-ending treadmill of wants and needs. Ordering premium products or going shopping every month may seem like a good investment idea at the moment, but if carried out for the whole year, that’s a lot of money. Of course, people want to enjoy indulging in such activities, but they fail to understand that they could end up in debt if spent recklessly. People run lives based on desire and end up working twice as hard to fulfill these cravings. On top of that, credit cards have created the illusion of spending money that people haven’t earned yet. Refrain from falling into that trap.  Get more control of your finances with audit assurance services by Price Bailey so that you can make well-informed decisions and focus on building your wealth. 

Investing in a home:

People entertain the idea of buying a house as an evergreen investment. Rushing to invest in a house by taking a home loan can be a big mistake because it sometimes incurs debt for a lifetime. So it’s advisable to start thinking about investing in a home only when you have planned out your path to financial independence. Nobody likes to live a life with EMI’s to pay off every month.

Credit abuse:

The banks are constantly looking to provide everyone with a new line of credit or set up with a loan people might not even need. Having a credit card might be a good decision, but one needs to learn how to use it. So, budget management plays a huge role in helping you with credit. On most occasions, people end up affording more than they can to satisfy one of their lifestyle needs which could, unfortunately, be one of the most significant financial mistakes ever. Do not satiate desires with the credit one doesn’t have the means to pay back in the future.

Not having a sound insurance plan:

Health Insurance is a must-have for everyone. It is always advisable to think about worst-case scenarios in your life and plan in advance where one needs to be insured. If emergencies occur out of nowhere, you can lose your entire savings. So, it is better to have insurance cover in such scenarios. 

Lack of financial goals: 

The real key to becoming wealthy is not earning more but investing cleverly. For that, one needs to understand the psychology of money, learn how to find new investment ideas, and then make it a point to practice investing consistently. There are many investment opportunities apart from the regular avenues like gold, real estate, etc. For example, one can invest in cryptocurrency, the stock market, mutual funds, and many more. Savings can get you only so far, but investing with a clear strategy can lead to financial freedom.

Financial freedom is a critical part of leading a happy and healthy life. One must take the time to think about what financial freedom means to them personally. The root cause of financial trouble is mainly the lack of a financial plan when adversity appears out of nowhere and short-term thinking that leads to financial traps throughout one’s life. Earning money should liberate people from it, not confine them within.

Few tips to start your investment strategy:

There are few aspects an investor needs to understand before investing. To start with, one must always learn how to do their research. Second, it is wise to spread one’s investments across multiple avenues to minimize risk. But one must also understand that lower the risk, lower the reward. However, there’s nothing wrong with experimenting if there are clear signs of great ROI (return of investment) on a new asset class.

So, have you heard of the word Bitcoin?

If yes, then the time is perfect for investing, as Bitcoin and other cryptocurrencies are winning the hearts of people worldwide. The next thing one needs to know is where to buy these cryptocurrencies safely and securely. In that case, we’d recommend Giottus Cryptocurrency Exchange as one of the oldest and top-rated exchanges in India. Giottus offers the best rates on Bitcoin, Ethereum, Cardano, Dogecoin and 100+ cryptocurrencies. In case if you are wondering, “Is Giottus safe?”, then absolutely yes. BitGo, a world leader in custodial services, secures all the funds bought through Giottus. You can download the Giottus app to register your trading account and start investing here –  

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