Now is not the time to be having a financial crisis. Financial crises ruin lives and now, when the world is facing a recession and economies are flailing it is harder than ever to recover from a stumble. Always be mindful of these factors to safe guard yourself from financial failure…
Financial Pitfalls to lookout for…
1. Not having a budget – If you do not have a budget you will not be able to effectively measure where your money is going, saving will also be a challenge for you.
2. Credit Card Debt – Having extra money to spend is definitely a temptation, but try avoiding credit card debt as much as possible. Use your credit card only when you have to and for expenses that make sense.
3. Not saving – When you budget you can set aside a little income every month towards your savings. Make sure you save at an institution that allows you to maximise your earnings. Use Building Societies or speak with your banker to work out a portfolio that will be beneficial to you.
4. Not having a Retirement plan – Plan for your retirement! Do not bank solely on a pension plan either as history shows pension plans sometimes fail. Accumulate assets that will work for you when you are not. These assets can be investments, shares, your own business and real estate.
5. Bad Tax Habits – Put simply, you don’t take tax time seriously enough. Taxes and the penalties they accumulate can be the coffin and the nails of your business. Taxes are easy enough to do if you are well prepared and take the time out to manage your returns. Use these tax tips to keep you on the straight and narrow.
6. Living beyond your means – This can happen very easily if you don’t have a budget. Spend only what you earn or can manage to pay back (in the case of credit cards). Tip – ‘Keeping up with the Joneses’ is a terrible financial strategy.
What happens if you stumble into a Financial Pitfall?
The most obvious occurrence is, of course the fact that you may becoming destitute; but there are other situations that can manifest themselves:
You have no savings – This will keep you living from paycheque to paycheque. You will also have a hard time should any emergencies arise e.g. getting sick or your car breaking down.
You engage in illegal activities – You may be tempted to engage in illegal activities as a means of extra income to satisfy your needs.
You become a victim – This is the point in your life where you may be most inclined to try a ‘get rich’ scheme. It may also be the time you find yourself a victim of scams.
How do you avoid a Stumble?
- Speak to a financial adviser!
- Avoid debt, even if you have to live frugally. Only accumulate debt when taking risks that lead to financial stability (starting a business), this way the money you borrow will pay for itself.
- Do detailed research when looking for assets to invest in.
- Do not put trust in persons or organisations that don’t have a reputable background.
- If the deal looks to good to be true, stay away. More than likely it is.
Your financial health is a critical factor in living a peaceful, stress-free life. Always factor in the financial aspects of your life whenever you are making decisions or changes.
Now that you are armed with this knowledge, you will see these potholes a mile away and avoid them. Make sure to implement these tips and ask yourself, ever so often, if you are making the best use of your hard earned money.