5 mistakes To avoid to build successful financial future.
Tags: Credit Cards, Money Mindset, Beginner Trading, Wealth, Mistakes

5 mistakes To avoid to build successful financial future.

Investing can be challenging for a lot of people. There is always an opportunity in the world somewhere for investment but before you start investing.

I avoided following 5 mistakes and built a better wealth for my future.

Keeping credit card debt

Credit card use is an integral part of our lives nowadays. If you’re short on money and need to make that purchase, you can use it and pay it off later. All the rewards, points, and cash backs make it even lucrative to use the credit cards. The problem starts when at the end of the month you don’t pay this balance, it starts loading humongous interest on your balance, so the item purchased for becomes way more expensive in a few months. The fact is, revolving consumer credit card debt has gone up to nearly $1.1 trillion at the end of February 2020, according to the Federal Reserve G19 Report. Federal Reserve reported in February 2020 that the average interest rate on credit cards that were assessed interest reached an astronomical 16.61%, and some can run as high as 30% for accounts that are under penalty APR terms. There is no way you can get a 16.61% return in any investment vehicle consistently, so instead of using money to invest, use it to pay off credit card debt. If you have excess money over that, use it appropriately towards investment.

2. Not having health or life insurance:

Health and life insurance don’t just protect your health, it also majorly protects your assets at the time of hardship. Both health and life insurance are essential to protecting yourself and your family from financial ruin. Few things to consider are that everyone falls sick at some point in their life, health insurance helps you pay the expense without running through your savings. It also protects you from draining financially if you found to have chronic illnesses like autoimmune diseases, congestive heart failure, diabetes, cancer. Most health insurance also covers the full cost of preventive care. Life insurance is also a must for your family’s financial health. You do not want to leave debt as your legacy to your family, Life insurance helps prevent this from happening. It should be a valuable part of your long-term financial planning. Use term or permanent life insurance according to your personal financial needs and planning but have this backup plan if things don’t go in your favor from your health perspective.

3. Not discussing finance with your spouse:

It is difficult for some to discuss money matters with your partner but it is important to talk about it. As an individual, you are more likely to make a mistake when it comes to financial planning for the family. Vision for your future finance should include your partner’s input as their future is connected with yours. It also helps to get an opinion from someone who really cares, it prevents you from making a financial mistake early in the game. For example, if your spouse wants to build a new kitchen, cost of which would be a prolonged financial burden on you and your family, you should discuss your financial vision with her to come up with a better plan to achieve this goal at an appropriate time with better financial stability. In the end, life is valued by moments lived and not by dollar value but the number of such memorable moments increases when you have good financial stability.

4. Not saving thinking it’s too little

To start investing you have to start with saving. First, save as much as possible. This requires lifestyle changes, living close to your current lifestyle but avoiding major unnecessary expenses to get financial freedom. Second, start saving early. I feel early savings go long ways for your financial success. Another advantage of saving early is to have the time for it to grow. Third, make a habit of saving part of your life. If saving becomes part of your life, you ‘ll not feel like you are compromising in anything, instead, you ‘ll start feeling proud of yourself. Fourth, invest your saving no matter how little it is. Don’t wait because you have 100$ to invest, start today, and keep adding to it before you realize your savings would increase to a large amount. Fifth, don’t stop saving, and don’t stop investing. If you continue both these practices, you ‘ll definitely come on top of your financial plan. Investing is like planting a tree, you cannot expect to have fruit right away, you have to water it consistently and for a long period of time to get the fruit of your hard work.

5. Not Contributing fully to retirement plan:

Contributing to a retirement plan is like securing your future. If the employer matches that contribution than it’s like getting free money for securing your future. As this free money grows, the actual amount at retirement becomes significant. When my wife started working, we had a discussion about how we should contribute to the retirement account, as my income was covering our daily living expenses, we decided to put every penny earned to her retirement account till she reached the max limit, this resulted in her getting the max matching money from her employer, this strategy has paid us handsome return.

So in summary, credit card debt is one of the worst debt one can have as it makes your purchase more and more expensive as time passes, in turn, drain your savings. Absolutely, get rid of it if you can. Health and life are the most valuable gift we have, we should learn to embrace it and protect it. Start saving, do not hesitate to invest that money you saved. Start small and don’t stop. Have your spouse on the same page so you do not make a mistake. And secure your retirement by contributing max.

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