Even with the best of intentions, the quest to be financially independent is not easy. However, it’s not just the positive things we do that will affect whether we’re successful or not – it’s those pesky mistakes we make along the way that will, too. Although we can have a list of five things we’re doing that will bring us financial freedom, many people are also making six mistakes, which is derailing all the good work they’ve done. Below, we take a look at seven of those all too common mistakes that can make our good plans go awry.
Saving $250 = Reward
There’s an aspect of being financially responsible that people often overlook: it’s annoying. Given the choice of adding $50 to a savings account or having a few beers and a takeaway pizza after a long day of work, many people take the beer and pizzas and don’t think twice. This is an especially easy mistake to make when you’re actually doing well with your savings target. But remember: saving a few hundred dollars is something you should be doing, not something you’ve done well that deserves a reward. Resist the temptation to treat yourself just because you think you’ve earned it; you’ll only be pushing your goal further away.
Not Plugging the Holes
You can save as much money each month as you want, but if you’ve still got expensive debts hanging around your neck, then you’ll be making life that extra bit difficult for yourself. Before thinking about boosting your savings pot, make sure you’re not losing more money than you should through your debts; if you’re paying high interest on a number of debts you have, then you’ll need to do something about that before anything else. Several professional debt relief options are available to help you get it under control and make the payments more manageable. It’s only when the holes have been plugged that the boat can sail!
Not Taking a Chance
‘Taking a chance’ might have been what got your fingers burned financially in the first place, but that doesn’t you should only be playing it safe when it comes to your finances. While saving a percentage of your income and paying down debts will make a difference, real independence will only come when you don’t have to worry about the money in your bank account – and you won’t be able to do that if you don’t take a chance. Of course, it’s about analysing the risk and making an informed decision. Stick a low risk, diversified portfolio to ensure you don’t have all your eggs in one basket.
Not Following YOUR Dream
People tend to get into debt in the first place because they’re following someone else’s dream. They don’t always learn their lesson, however, and can sometimes follow someone else’s dream when it comes to financial independence, too! Only you know what you’ll need to be monetarily secure and comfortable. If it’s enough for you to have your own house and $30,000 each year, then that’s what you should be aiming for
Keeping Savings in Regular Bank Account
Of all the simple mistakes, none are as damaging or as avoidable as keeping savings in your regular bank account. It’s a recipe for disaster waiting to happen. Keep your savings separate, and you’ll have a much clearer understanding of your finances, and will avoid accidentally dipping into the cash you had earmarked for something else.
Not Revisiting The Approach
You, like everyone else, will change as you grow older. What was a dream or aspiration when you were 35 may be consigned to history by the time you’re 45. In the process of gaining financial independence, you should be reviewing your goals – and how you plan on achieving them – regularly. Some, like what you want from life, will come naturally to you, while other will be enforced, for example, if you have a child or change jobs.
Living in the Future
And finally, of all the mistakes that people make, none are as damaging as believing that financial security will come from nowhere or can be put off for a year or two. There is no magic bullet, and there’s no mythical check that’s going to spring from the sky and remove all your money troubles. It takes hard work. The best time to start the journey was twenty years ago; the second best time is right now. Don’t delay.
Avoid these mistakes, be proactive with the positive steps you can take, and your finances will look better in no time.