To achieve financial independence and freedom during your golden years, you should set money saving goals as early as possible. While you are saving up for retirement, you should also take care to avoid money goal mistakes that can hamper your effort and stand in the way of financial freedom.
Here are some mistakes that you should avoid in order to achieve your money goals:
Not Making a Budget
A lot of people think that making up a budget is hard work. Hence, they avoid making a budget altogether. This is a big mistake since a budget will certainly help you to save more and achieve financial independence faster. In fact, for most people, financial independence is not possible without a budget.
Making a budget is simpler than you think. You can work with a spreadsheet to even with just pen and paper. You should list down your expenditures and income on the right and left side of the page. Take a close look at your expenditures to find out which ones are excessive like eating out and entertainment. You should then write down the intended (budgeted) amount for these excessive costs. This will help you to save more and is straightforward. The very act of drawing up a budget will engage you and compel you to work seriously rather than just thinking about it only to delay or forget it.
Falling Behind on Payments
Whether it is credit card bills, utility bills, rent or any other expense, always pay on time. If you fall behind on payments, not only will you have to pay high interest and penalties, you will also be reported to credit bureaus. Negative statements in your credit report will increase interest on any future loans and even deny you that much needed loan. You can then say goodbye to that house and car.
In case, there is an emergency due to which you cannot pay up on time, get in touch with your creditor to inform them about your problem and negotiate another due date.
The best way to avoid such scenarios is to draw up a budget. With a good budget and frugal spending habits, you will almost certainly have enough to pay your dues on time.
Not Using a Debit Card and Racking Up Credit Card Bills
Do not rack up credit card bills that are too hard to pay back. While you should use your credit card to pay the more expensive items, never use it to buy everyday items like groceries. You can use debit cards for daily purchases.
Even for expensive items, you should use your credit card if your budget permits. Always note down your credit card expenditure for the month to keep track of how much debt you have incurred so far. Your budget should have a low threshold beyond which you should never use your credit card. In short, you should carefully plan the use of your credit card rather than using it whenever you please.
Avoid using credit cards for daily shopping. If you want the convenience of electronic payments, get a debit card.
Borrowing Money from Friends and Family
While borrowing money from friends and family is better than piling up credit card debts, you should be aware of the downsides. You could end up straining your relationships and losing face in front of friends and family if you do not pay back on time. Thus, you should be very careful about borrowing from loved ones.
Once again, the best way to avoid such circumstances is to draw up a realistic budget so that you almost always have enough.
Not Looking for a New Job
If your job growth has stagnated and you haven’t gained good raises and promotions for quite a while, then it is time to work elsewhere. There is no point in staying on a job where there is no room for growth. That would mean wasting your experience – an invaluable asset that can help you earn more.
Don’t just stay on the job simply because it has become your comfort zone. It could take some time to adjust to a new place, but if you choose the right job, you will be glad that you did. Don’t worry about losing your colleagues. You can keep in touch with them through other ways if you want to besides the workplace.
Not Using Savings Apps
Several apps are now available for tracking your expenses. These apps are very easy to use and you can almost certainly save more by recording all of your transactions with these apps.
A big problem with budgeting is that people often do not know where their money went. They are clueless as to their expenditures on entertainment, food and other important areas. If you don’t know the numbers, then how will you compare them with budgeted costs? Budgeting could become largely futile if you do not record all expenses scrupulously.
Thankfully, you now have simple apps to note down all costs effortlessly. You should always install a saving app so that you can stay on top of budget. With a saving app, the chances of failing to keep within your budget (and suffering the ensuing guilt) will almost certainly subside.
Not Using Automated Savings
You should always take out a predetermined savings amount from your paycheck. You should pay yourself and save more before making any other expenditure. Thus, you can be more certain of meeting your monthly savings goals as the money thus withdrawn is unavailable to you once it is saved. With this method, there is no chance of spending away your money so that you have nothing left to save at the end of the month. Whats more, you will soon get accustomed to living off the reduced monthly amount that remains when savings are deducted. You wont miss the amount saved thus.
To this end, you can use the automated savings function that will definitely be available for your bank account.