Money mistakes can happen to anyone, including the suavest budgeter. But realizing these blunders and steering clear of them is the swiftest way to financial health and survival.
With mid-year already here, you can stop dead in your tracks to look at the financial wrongs that affect your financial goals. Even if none of the money mistakes are terrible enough to destabilize you completely, they can eventually impact your overall goals.
The earlier you nip them in the bud, the better you can get on the right footing even before the year ends. Let's explore the list.
A few truths concern debt. For example, getting into it could be fun and exciting. But getting out of debt is challenging. It still is worth every effort to try and get out of debt.
But are you swapping your emergency funds to settle that M-Shwari or Mama Mboga debt? Could you be dipping into your retirement account to pay off the pending Sacco or Bank loan? It is all wrong. You can begin to plan for a budget that doesn't interfere with your critical savings accounts.
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Most money mistakes can also occur because of your circle of friends or co-workers. For example, do you easily bow to your colleagues to splurge even on the unnecessities?
If you opt for lunch in high-end hotels because that is where your friends or church pastor dines, then you could be in for a rude shock financially. Do you jump on the bandwagon and head to Naivasha's annual safari rally because most of your friends are already there?
There isn't any shame in shelving those pennies while your friends have it large on weekend entertainment and luxury items. If you can comfortably do without any of the pulls, please do. With the year in its rush mode, it isn't too late to cut loose the magnet to control every aspect of your money.
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Having an emergency fund is significant. But do you maintain and boost it to sustain you for about three to six months in case of those unexpected costs? A mistake is when your emergency fund kit isn't healthy enough to shoulder the cost in the event of a job loss or medical emergency.
It is time to be brutal with your emergency savings, making it a non-negotiable monthly saving. And if you have extra funds at the end of the week or month, besides your already set minimum, hoard it into your emergency savings account.
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Not having a medical cover is one of the things people take for granted that can lead to grievous money mistakes. Yet an illness that can rear its ugly head when you least expect it. A health issue requiring hospital admission or massive amounts of money can wipe your savings account in minutes.
Luckily, there is NHIF. The lowest monthly amount you can pay into this medical fund is Ksh500. This fund is reasonable to almost anyone unless you can afford a more significant premium. With a medical fund, you can sit comfortably and take care of your other bills, including debt repayments and school fees.
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The fundamental mistake that comes in when it comes to budgeting is one, not having one at all, two, when you do not create a realistic one that reflects your finances, and three, when you fail to stick to it.
A budget enables you to track your expenditure, and it can never be too late to create an accurate one to monitor every aspect of your money and where it goes.
A tight financial plan guides you into crossing off those things you can live without. You can then use the extra money to boost your emergency fund, pay off debts and pay your bills on time.
Most of the businesses, cars, and impressive homes you see in the neighborhood do not come from luck and windfalls. Financially savvy individuals with lean budgets make these dreams possible.
Read Also: How to Budget and Save a Lot of Money As an Employee
The recent years have been economically retrogressive. Covid19 and the global recession have had an impact on people’s finances. Your biggest financial mistake is to want to maintain the status quo or allow the lifestyle creep to keep you captive.
Perhaps you insist things remain the same or even better because you can afford it. Do you feel you work extremely hard for your money hence the splash? Irrespective of your financial situation, keeping up with appearances can hurt your finances eventually. It's time to cut the slack, adjust, and be flexible to fit the current economic circumstances and save for the future.
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The “food delivery guy” is a habit and perhaps a grave money mistake that could negatively impact your finances. The regular restaurant dining also excavates a huge gaping hole in your pocket. Although money-saving tactics exist even when you order in, you can still cut the number of times you order or eat in hotels.
Suppose you decide to make your meals at home instead of the charming restaurants for the remaining time before the year elapses? You will have made considerable savings to help you meet the financial goals you might have set as the year began.
Another financial mistake people make is to bow to unaffordable vacay and event expenditures. That upcountry or abroad holiday is never a must if you want a healthier account by year's end.
Being prudent with your money also means avoiding the temptation to attend every wedding, ruracio, or baby shower.
Generally, keep off any celebrations that keep your account in starvation mode at the best times.
Are you the kind of person who will buy that glittery trench coat or mindlessly binge on a steak dinner you hadn't budgeted for? In the process, you may overlook that nudging debt or school fees. Of course, this is a financial mistake. You might have to rein in your impulse buying urges and choose money discipline instead.
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How many bank accounts do you maintain at any given time?
Most bank accounts carry a maintenance charge; the more accounts you have, the greater the monthly fees you pay.
Do you ever scrutinize the money that goes into maintaining duplicate accounts? To remain financially robust, you might have to disentangle some of the banking accounts to cut your monthly spending on maintaining them.
Read Also: Reasons You Should Close Your Idle Bank Accounts
Holidays, events, and celebrations call for a gift exchange, and even when you are that money-conscious individual, you may lose your marbles at this time. But meaningful gifts do not have to be unnecessarily expensive.
Often the thought that counts. So, think twice if you have been buying appliances, cars, or even those Kitengela plots to satiate your loved ones. Next time think of small yet meaningful gifts like a card, portrait, or necktie.
It is about keeping it real and not losing your money sense because of a friend's birthday party or wedding. You might underestimate your expenditure, but an impromptu audit could show how much you overspend.
Everyone is prone to mistakes, especially financial ones.
You can't let guilt and regret consume you for the remainder of the year. So necessary changes, including adopting a strict financial discipline, can be among the best options.
Scrutinize your budget, see where the mess is, and create remedial measures to put your money on a healthy footing before the end of the year.