Many of you might be thinking of making new financial resolutions. And these monetary goals can be the absolute hardest to keep.
When it comes to making a resolution, it's easier to cut back on chocolate or call your family more frequently, but sticking to a financial resolution is an all-year round challenge.
However, if you're determined enough to set a money resolution, make sure you go about it the right way. A good place to start would be to resolve to make smarter money decisions and avoid the mistakes you've been making in the past. Let us highlight five of the most common financial mistakes, and how you can steer clear of these in 2019.
1. Not broadening your investment ventures
Diversifying is key when it comes to investments. When you've spared some cash to invest into the stock exchange, make sure that you keep this in mind. Numerous first-time investors tend to read well-known books on investing, and then envision themselves doubling or tripling their wealth by making a single investment. They think they've identified the best stock and invest a much bigger amount than they should have. Having done so, they are sure to be devastated when their chosen stock falls behind the market or ends up bringing in a huge loss. The same principle applies to investing in any asset that has an element of risk attached to it. Failing to diversify your investments is essentially putting all your eggs in one basket, and when this basket breaks, you're going face a huge financial setback.
2. Investing in something you don't comprehend
Most financial experts believe you should just put your hard earned money into something that you comprehend and believe in. Try not to go by cases made by other people pitching it to you, for they could well be heading for financial derailment as well. When dealing with that relative who markets overwhelming investment schemes to you, listen to him but make sure you do your own research and invest based on your risk appetite.
3. Spending well beyond your monetary limit
If your monthly salary is Dh20,000 and you burn through Dh25,000 on a monthly basis, you're obtaining Dh5,000 from external sources to meet your costs. This could be a personal loan or even worse, a high-interest credit card. When operating with such a heavy financial toll, you will inevitably get caught up in a cycle of debt. To avoid the financial heartache, make sure you live within your means.
4. Engaging in an unsustainable lifestyle
When someone gets a pay raise, they feel the immediate need to upgrade their way of life. From purchasing a swanky new car to designer clothes, most will do everything to 'keep up' and carry on with a way of life they perceive as a merit of their job and salary. This is a huge financial blunder, as it will reduce one's capacity to keep producing more wealth.
5. Not having a soid budget
Having a solid budget and a financial plan-of-action enables you to be responsible for how you spend your cash. People who drift through life without restraint lose control of their money and end up with their money controlling them instead. For this very reason, it is imperative to first map out a solid structure and a proper budget for how one will go about dispensing the cash.
Copyright © 2022 Khaleej Times. All Rights Reserved.