Do you want to see yourself always juggling your way through EMI’s, thinking a million times before spending or compromising on all your whims and fancies? Or do you want to see yourself enjoying a dream vacation in your golden years?
The difference is worlds apart but the mistakes that can cause them can be quite blurred.
Here are the most common mistakes which might cost you the life of your dreams.
1. Great, you bought a new house!
Whether you rent or buy a big house,it is very easy to overpay for a few extra amenities or space. It might be a proud moment but can turn to remorse as soon as there is a financial crunch and would probably wish to stay in something a bit smaller because of all the extra expenses. So make sure you decide how much of a house you can afford before making this big choice.
2. Want to have a big fat wedding
Aspirations of the millennial dream weddings can burn a hole in the pocket big time. Parents tend to pour their life savings and apart from that, borrowing might be necessary even for a not-so-extravagant wedding. This is where miscalculation and ignorance can root up. Only sky can be the roof for the spending, but it is important to look at them in an efficient and practical way. It's time to change the way marriages are conducted and say goodbye to the big fat wedding.
3. Okay, now you need a new car?
Remember the 20/4/10 rule: at least 20% down payment, no longer than a four-year loan, and no more than 10% ofincome on auto expenses! Nothing more and really good if it is something lesser than this. Always better to buy a car providing utility than a luxury statement.
4. Wait for grey hair to start retirement planning
Too cool for retirement planning? Did you know the biggest mistake can be starting retirement planning after the 20’s? Start in the 20’s, put aside small amounts every month and enjoy the power of compounding.
5. Yay, It’s a sale and you cannot resist
The malls, banks lure you to the store in the name of sale and trigger impulse buying. Short term happiness but a long term pile of things you just don’t use anymore. It is very important to know what you need and what you just want to buy because of a discount.
6. Not building good credit
CIBIL Score: Ah! Maybe you never thought something would be more important than the exam scores but here it is CIBIL Score. With a high score, the chances of bargain on charges, interest rates, terms also increase along with the odds of getting a loan.
7. That’s somebody you should not listen to
Financial advice from an insurance agent just because it is free might not seem like a bad idea. But at the end of the day, an insurance agent’s job is to sell you an insurance policy and he succeeds. But a financial advisor can be a trusted partner to understand your finances and help you lay a path of financial freedom.
While we refer to most people, it is important to understand that everyone’s finances are different i.e their opportunities, incomes,lifestyle varies so everything portrayed in this reading are not hard and fast rules but based on financial principles. So whether your paycheck says 100,000 or 10,000 the actions to avoid the mistakes can tend to be the same.
Break free from the financial shackles and design a life you always wanted.
So, no matter what, figure out where you went wrong, don’t beat yourself up, learn from your mistakes so you don’t keep making the same ones again. And when you get to a ripe old age, you can look back on a life without regrets.