However much you prepare, there are certain things which are far beyond your control. We are always thinking about a great life, a beautiful vacation, and a promising future. However, we do not know what is awaiting us at the end of the tunnel. Since it is better to be safe than sorry, we can look out for various mistakes that are likely to occur and plan accordingly. Here are five such mistakes:
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Depending on tomorrow’s income
Pay-cuts and job scarcity in the market can occur at any time. So in case you are tempted to splurge on loans and credit cards, you need to think twice. In today’s world you can’t afford to dream about an ever increasing salary and depend upon it.
Not saving up for a rainy day
You will pay greatly later if you do not have an emergency fund. This is a mistake committed by even people who seem to have an enormous amount of cash flowing into their accounts. They fail to keep aside money to meet living expenses, which may convert into emergency expenses. How will you manage in times of crisis? Ensure that you have an emergency fund in the form of a bank account or at home.
Bad investment decisions
Make sure that you make good financial decisions by investing sensibly. Buying property randomly and anticipating it to appreciate overtime can be a very poor decision. Sometimes you might think investing in stocks is the best option, considering the present rosy scenario. It is likely to change, so do not keep unrealistic expectations in mind.
Ignoring family responsibilities
Heaven forbid, this never happens, but in case the primary bread winner in your family meets with an accident or falls ill, chances are that you will have to handle the financial responsibilities of the family. Always be alert about your parent’s and family members’ investments and keep yourself updated. Being ignorant about these details can be very foolish. Ensure that your parents and other family members have their life insurance in place.
Fiddling with your retirement account
You may be able to borrow from your retirement account now to satisfy your wants such as a fancy car, phone, laptop, or some other commodity you might not even need currently. Remember that you can borrow now but you will have nowhere to go to pay for retirement. So keeping this in mind, it would be best to let your retirement account remain as it is. Overindulgence can be very tempting, but never lose track of your long term goals. It’s what you think of today that determines your lifestyle tomorrow.
It’s true that you can’t chart out your life’s plan and figure everything out immediately, but what you can do is foresee what is likely to happen and plan accordingly.