I don’t know about you, but I’ve made so many decisions in my life that I’ve ended up regretting in hindsight. These were mainly financial decisions, like credit cards sign ups. The funny thing is, in the back of my mind I knew most of them were mistakes, yet I still went ahead and signed the dotted line.
In retrospect, knowing what I know now, I can’t believe how naive I was. Having a credit card is like starting to date someone you know is wrong for you. Even though your head is telling you you’re making a bad decision, you still meet up with them because of the excitement of the new relationship. Credit cards provide that same level of excitement. It’s something new and exciting, and you get to spend money that you don’t actually have. What could go wrong? Everything, it turns out.
So, I learned from the mistakes I’ve made and I’m here to help you understand the bad money decisions you’re making now and how you might regret them down the track. See below my suggestions surrounding 4 money decisions you will regret later and how to avoid them.
Not having a budget
Going on a budget is a scary thing for many people. Either they believe they’re going to have to start living a frugal lifestyle or they’re just going to fail because it’s too hard. That’s definitely not the case! I’ve been on a budget for a long time and it doesn’t stop me from buying things I want or going on a holiday. What it does do is stop me from buying unnecessary things that I think I want, but will likely just sit in a cupboard untouched, until I eventually get rid of them. Being on a budget helps me know where exactly my money is going and decide how important each of my wants are.
Budgeting is not just for people who struggle with money. A budget will help you build financial discipline, buy a house, buy an investment property or have the peace of mind of knowing that you have enough money to support you and your family in case of an emergency. Your budget doesn’t need to be a complicated thing. You don’t need to spend hours working out your expenses every week. Even implementing a simple budget will be one of the best financial decisions you can make.
It’s a very simple fact that everything we do in our life costs money. So, what happens when we don’t have money to spend? We start looking for money that we don’t have. Usually this comes in the form of a credit card. With a credit card, every purchase feels exhilarating because you’re able to buy all of these things that you wouldn’t be able to otherwise. Trust me I know exactly how it feels; I was a master of spending money I didn’t have.
Now, having a credit card doesn’t have to be a bad thing. They can help you during your tough times and it will improve your credit rating if you keep up with your repayments. All I’m saying is if you don’t have any financial discipline, practice using it before you get a credit card or don’t get a credit card at all.
Not having an emergency fund
We all experience unexpected expenses. This is an unavoidable part of life. It’s unavoidable, but we can plan for it. I found that one of the best things about going on a budget was learning to build up an emergency fund. The peace of mind that having an emergency fund brings you is indescribable.
Our lifestyle is purely based on our income. So, it’s just common sense that having 3-6 months of your expenses saved in a savings account will help you come out on top – especially considering current circumstances that COVID-19 has brought upon us. It’s never too late to start an emergency fund. If you don’t have one, please make the change to start one today. Every dollar you save is a dollar that you don’t need to scrape together in an emergency.
Not buying a home or not saving for one
I understand that buying a home is a big commitment. If you are a young adult with an average income you might think it’s not even an option.
While renting might give you flexibility, as long as you’re renting you will be paying someone else’s mortgage. Always remember that.
If you are not in a financial position to buy a home right now, start putting away some money for a deposit. Make sure you don’t touch that money, even in an emergency. It’s so much harder to save for a mortgage when you have a family with kids so I always suggest starting to save as early as you possibly can.
We make so many decisions in our life, some we regret some we don’t. It’s all about learning from our mistakes. That’s the only way to continually improve your circumstances and not fall into the same traps over and over again. All the mistakes mentioned above are mistakes that I made when I was younger. Although I regret them, I’m pleased that I made them. I didn’t have anyone to teach me the things I’m teaching you here. Because of the mistakes I made, I’m able to help the people around me better themselves financially. That makes me very proud.
So, take a look at your finances and if you find that you’re making any of the above-mentioned mistakes, work on changing them today!