When it comes to money management, one of my favorite stories is about the prodigal son who took his inheritance from his father (while he was still alive) and squandered it. This story describes what happens on the other side of the quintessential grass-to-grace story we all love—the fall from grace to grass.
We rarely discuss how easy it is for someone who appears to be in good financial standing to lose everything in the blink of an eye. I feel it is critical to have these discussions because there are several lessons to be learnt which could help others avoid making the same mistakes.
“It’s said that a wise person learns from his mistakes. A wiser one learns from others’ mistakes. But the wisest person of all learns from others’ successes.” – John C. Maxwell
Here Are 3 Money Mistakes You Must Avoid;
1. The Lack Of Financial Plans.
“A good financial plan is a roadmap that shows us exactly how the choices we make today will affect our future.” – Alexa Von Tobel
One of the biggest mistakes you can make on your path to financial freedom is not having a financial plan. A financial plan is an outline that shows you where you are and what you need to do in other to achieve your financial goals. It informs your financial decisions.
Not having a financial plan is like going on a road trip without planning your route. While you might still get to your destination, you would have wasted valuable time and resources.
Hence, commit to creating a financial plan – Write it out, attach a realistic timeline and be determined to accomplish it.
2. Untracked Expenditure.
“A budget is telling your money where to go instead of wondering where it went.” – Dave Ramsey
Failing to track your expenses is a bad habit that can have serious consequences. When you do not have a clear picture of how your money is being spent, it is impossible to manage it properly. In order to avoid such situations, you should develop a realistic weekly, monthly, or yearly budget & adhere to it. Once you have established a budget, you may compare your expenditures to it to verify that you are not overspending. Consequently, you will be able to identify which expenses need to be reduced and which areas require additional resources to achieve your financial objectives.
3. Spending More Than You Earn
“Financial peace isn’t the acquisition of stuff. It’s learning to live on less than you make, so you can give money back and have money to invest. You can’t win until you do this.” – Dave Ramsey
There will always be the tendency to spend more than you earn, especially when your income is low, as the wants of humans are endless. However, spending more than you earn instantly puts you in debt, which makes it harder for you to achieve your financial goals. Hence, you need to be creative with your spending in other to avoid such situations, particularly if you are living from paycheck to paycheck. Find ways to get products & services at a cheaper rate & cut out unnecessary expenses. The sacrifices you make now will ultimately determine how far you go in achieving your financial goals.
Mistakes are a vital component of our ability to learn. However, while some mistakes leave scars, others can result in debilitating effects. Proper money management is an art anyone can master. It all comes down to being intentional about doing the right things.
Remember, You Have Only One Life To Live, Make It Count!
