Avoid money mistakes to achieve success

For you to be financially independent and even make more money, there is need for you to avoid costly money mistakes. It is understandable that every kobo that you avoid throwing away on frivolities is a kobo available for reaching your financial goals.

A lot of people including the financial literate and the illiterate ones do not recognise that there are common money mistake that affect their financial life.

Some of the money mistakes you need to avoid this year include reckless spending, not having a savings plan, not tracking your finances, borrowing at high interest rate,

Experts believe that the source of personal debt is spending more than you need. They said going for shopping when you are bored may lead you into buying things you rarely need. Many people find themselves buying fashionable items they do not really need on credit and forgetting to save for the future.

The case of Phillip Ikechukwu who invested all the money he earned from retirement into a business without proper plan and at the end of the day lost the business should teach a lot of people lesson. Instead of allowing the business to grow before he can reap from the profit, he was at the same time spending the money put into the business until the capital was eroded.

Experts advice that you need to make clear plan for what you need to buy and what you need to avoid if you are prone to reckless spending.

Sometimes companies and banks embark on sales promotion that get you attracted to buy goods when you do not really need it.

You are not expected to be overexcited over buy “one and get two” tricks otherwise you will just start to accumulate things you are never going to use.

Suze Orman, an expert in personal finance said you should avoid a variable annuity, especially for your retirement account. A variable annuity is basically a contract with an insurance company, and the money you invest is used to buy mutual funds within the annuity.

Experts also advice that you should not purchase life insurance on your children. Life insurance has one purpose, which is to replace the income of the deceased if anyone is dependent on that income. While losing a child is a tragedy, your child does not have an income that you depend on. So it makes no sense to purchase a life insurance in their name.

But you sure need to have a life insurance policy in your name because your kids and possibly your partner are dependent on your income.

They say if you want to avoid money mistakes, you should always make your budget. According to them, most people, even rich people, live without a budget. But do not worry: You do not need a ledger or spreadsheet program to create a budget that works. Simply draw a line down a sheet of paper. On the left side, write down all the money that comes in; on the right, all the money that goes out.

There is need to set financial goals and take them serious to avoid money mistakes. When people educate themselves about money, they start to see how the financial world really works and they start to explore their own financial potential. Have a conversation with your spouse or a financial advisor to figure out how much money to save and what to do with it.