1.Not Having a Budget
Not having a budget is probably one of the surest ways of running into financial distress . Without a budget, one is most likely to be unprepared for surprises. If you have no idea how much you spend every month, it will be difficult to save and create investment goals. Not having a budget can also lead to impulse buying, further creating a dent in your finances. Even worse, you might end up in debt. Draw up a budget and purpose to stick to it depending on your income.
2. Spending On Stuff You Don't Need
Failure to distinguish wants from needs can lead one to spend on unnecessary items. For example, the fact that most in your circle of friends already have cars may bias you towards buying one even if you may not necessarily need it. You may end up making purchases, moving neighbourhoods etc. just to match those standards when you actually cannot afford to do so. The result is almost always getting into debt - debt that you didn’t need in the first place.
3. Not Tracking Your Spending
To have a successful budget, one needs to track where the money goes, and what it buys each month. If you're not tracking your spending, even the very small purchases you make, you could easily be overrunning your budget unknowingly.
Tracking your expenses will give you a clear picture of where your money is going. Thereafter, you can make adjustments where need be. Your budget is as good as your expenditure tracking ability.
4. Maintaining your spending habits when your income has gone down
Try to lower your spending and adjust your budget accordingly, after income has been reduced For instance, after salary cuts experienced in the wake of the COVID-19 pandemic. Premium subscriptions and memberships or some leisure activities may need to take a pause until you can increase your income.
5. Not Setting Goals
Set specific goals for you to be easy to attain financial freedom. This is because these goals give you steps to work towards. These should be the reason you wake up every day and put in the hard work at whatever you do, so they should challenge and motivate you.
6. Ignoring Higher Income Opportunities
Always be on the lookout for possibilities of making more money. Making more money means you can stay away from debt and move you closer to the financial goals you have set for yourself. You can also start a side hustle over weekends.
7. Borrowing Money
Stay away from borrowing money especially when you have no guarantee of paying back unless it is an emergency. Try to look for alternative means of earning extra money.
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