4 Common Financial Mistakes People Make & How To Correct Them

September 6, 2022

Written by Isaac Sesi

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It’s OK to make financial mistakes as long as you try your best to learn from them. Making financial mistakes at any point in your life is bound to happen.

But turning those mistakes into lessons that will improve your future financial wellness is a choice you can and should make. Chances are with time you’ll come to realize things you could have done better, and you can try again. 

The following are some of the commonest mistakes people make when it comes to making and handling money. You may have made some of these mistakes already. Don’t mope when you read them again.

Refer to the first paragraph if you have forgotten it already. If you have not fallen into any of these bad money decisions yet, let the experience of people guide you to make better decisions about your money. 

  • Feeling Like It’s Too Late To Start Saving & Investing

Many people were not raised with financial literacy. Therefore basic things like budgeting and financial planning are lost on us. Many of us fall into situations where we wonder where our monies went. 

There is no account keeping and tracking of our expenditures. The effect of this is that we do not build the important habits of saving and investing.

To compound our problems, we feel it’s too late once we are advanced in age. Several Ghanaians only start saving when they are done with school and have jobs that pay enough to leave some for them to spare. 

Many people ask what the point of starting now is when they have lost so many years. That couldn’t be much further from the point. The questions should be what do you stand to lose if you start saving and investing now or to put it differently what do stand to gain if you start saving and investing now? 

It is never too late to start a saving or investment plan. Now is always the best time. It’s never too late to start. 

  • Not Diversifying Your Source of Income

It is dangerous to depend on a single source of income. Interestingly, that’s how we were raised to think. Go to school, learn hard and get a job. The model of successful people we saw growing up had singular jobs.

While that may have worked in the past, it surely is not the way to go today if you want financial wellness. You may have heard about people losing their source of income and getting utterly destroyed almost instantly. You don’t want that to happen to you.

We live in a world of slash careers now. You can wear as many hearts and do as many jobs if you plan your life well. One of the surest ways of diversifying your income stream is to make something of your spare time and hobbies. 

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Having a bit of extra income is a way of propelling yourself toward your long-term financial goals. It’s also a way to ensure that when you do treat yourself, you have the cash in the kitty to do so.

And don’t make the mistake of thinking that making money on the side is only good for your bank account. Having a side hustle is a great way to enhance your career prospects and is sure to impress a potential employer.

The best way to protect oneself from financial ruin is to have multiple income streams. 

  • Falling Into The Lifestyle Creep Trap

Lifestyle Creep is the urge to upgrade our lifestyles the moment we earn any more than we used to. Social media and the exposure to influencers and friends who are following trends fuels lifestyle creep which is basically a life driven by consumables

Many people tend to increase spending to satisfy the expectations of friends, family and society when there is a slight increase in income.

There could be genuinely good reasons for upgrading our lifestyles the moment there is an increase in income. However, this usually ends up with dire consequences for the person upgrading. This is because it leaves you with little to no savings, and you can even run the risk of borrowing money to keep up.

The solution to this common mistake is to, first, express and live by your own values, not that of others. Additionally, you must also increase your savings when your income increases. Experts advise that you should increase your saving by the same rate as your income has increased or even more.

  • Not Planning for Retirement

Retirement might seem like it is aeons away but it will definitely arrive. It is terrible to work all your life and have nothing to show for all those years of working or nothing to live by. And this is a result of the lack of planning for that stage of life. 

 As you expend all your energies on work today, you must also think about the time of your life when you will not have the energy to work. Financial freedom and wellness include thinking about every stage of your life and having enough to cater for those stages. 

Don’t become an old person who begs for alms or one who is forced to continue working even in their old age. There are so many pension plans around. Make your research and decide to enrol on one today and secure your future. 

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Financial mistakes can be costly. Don’t become a victim.

About Mesika

Hey there, my name is Isaac Sesi. I built Mesika to provide free personal finance resources online to help young Ghanaians become smarter about their money.

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