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| walet |
If you don't have a clear roadmap for you're spending , your financial options likely aren't wise.
1- Adopt a lifestyle that is beyond your means
If your expenses exceed your income, you will not be able to improve your financial situation, and it will be difficult for you to save money for emergencies or retirement, otherwise you will end up borrowing money so that you can cover your expenses, and the situation will get worse and worse with time.
To avoid this, the author recommends making sure that your expenses are less than your income. Ideally, your expenses - including needs and wants - should not exceed 80% of what you earn so that you can save the rest.
2- Not spending according to a budget
If you don't have a clear roadmap for what you're spending your money on, your financial choices likely aren't wise. In fact, you may allocate a large amount of money on things that are not very important to you, because you do not realize how much you are actually spending on them. On the other hand, you may find that you are falling short in achieving the goals that really matter to you.
The writer stresses that setting a budget is not difficult and there are many ways to prepare a budget that is appropriate for you, and the key to success in this is to choose one and stick to it so that you can spend your money in a way that is in line with your goals.
3- Borrowing with high interest
Sometimes borrowing money can make sense and beneficial. For example, if you take a low-interest loan to start a business that will help you increase your income, this is useful, but paying off some types of loans with a high interest rate, such as a salary loan, may be difficult. If you are going to take out this type of loan or you have a credit card with a high interest rate, you risk setting aside a significant portion of your income to pay interest costs; Which may make living on a specific budget difficult in the future.
The author recommends avoiding borrowing as much as possible unless it is at a low interest rate, or for something that will improve your financial position in the long run. And if you need to borrow, look for more convenient options, such as personal loans instead of loans with a high interest rate.
4- Buying a home that you don't have it's price
When you buy a home with a mortgage, you are putting yourself in a debt that could take decades to pay off. And if you expand your budget in order to buy a high-priced home, the mortgage payments you'll commit to paying can affect your ability to do anything else with your money during the time of paying off that loan.
In this case, you may find that you are putting yourself at risk of foreclosure, and you are nervous all the time about your ability to pay your bills. Owning an expensive home also comes with high property expenses, including utility bills and property taxes, that will compound your financial problems.
The writer points out that most of these mistakes can be avoided - fortunately - and can be corrected if you actually fall into them. For example, debt refinancing can help you pay off loans with a high interest rate, and you can always move out of your home if the mortgage is a financial burden. Realize that making any of these mistakes will affect your financial security; So you have to strive to avoid it.
