Are you earning well but still consider yourself financially unfit? Is money management hard for you? If yes, then you are at the right place. Let’s discuss
7 Financial Mistakes Salaried People should Avoid
1. Leaving investments for a later date
Young individuals tend to think of ways to spend money and not invest. The thought that investments can be made when salary increases keep holding us back. But the reality is when salary increases; expenses rise too. It’s high time that you start prioritising investments. Investments are the only way you can beat inflation and secure your future. Hence, start today!
2. Ignoring to build an emergency fund
It’s true that salaried people have a consistent source of income each month. But emergencies can happen to anyone. Huge medical bills (if you don’t have health insurance) and other expenses might eat all your savings. It might also lead to high debts. An emergency fund is a bliss during tough times. You can start building an emergency fund with as little money as you can. It doesn’t matter if you can afford 10% or 20% of your income. You shouldn’t ignore building an emergency fund at any cost. Read our blog Smart Strategies for making the most of your investment in 2023 to get more deeper insight.
3. Not having a separate health insurance
Your employer might have covered your health-related risks under a policy. But what if you are laid off, and an emergency arises? What if the policy is not enough to cover all the expenses? Hence, getting separate health insurance for yourself and your family is crucial. It is designed to cover all your specific needs. It provides you with an additional sense of security.
4. Not creating a monthly budget
Consistent income doesn’t mean you don’t need to create a budget. If you don’t keep track of your expenses, you’ll probably end up overspending. Expensive coffees, frequent dining outings, unused expensive subscriptions etc., will end up burning a hole in your pocket. Hence creating a budget and sticking to it is vital.
5. Setting unrealistic financial goals
If you do it, trust us, you’re not alone. We all set unrealistic goals for ourselves and end up getting disheartened. Setting realistic goals requires a close inspection of your finances. If you want to buy a house, calculate the amount you can save each month, set a timeline and start working towards it. You can’t imagine buying a home worth 4 crores in 5 years when you can’t even save a few lakhs each month. Hence, set SMART (Specific, Measurable, Achievable, Relevant and Time-bound) goals for yourself.
6. Not utilising your free time in a productive manner
If you have spare time, maybe 3-4 hours a day, consider making the most of it. Take a side hustle and consider monetising it. If you’re good at baking, you can start your baking business. Good at designing? Consider freelancing. The options are endless. This way, you can fill more money into your bank accounts. Also, Read our Blog Common Mistakes to Avoid while Investing in Mutual Funds to ger more insights.
7. Living life paycheck to paycheck
Do you spend all the money you earn? Have you imagined how you’d survive if you lost your job for a few months or a recession hit our economy? Hence, saving and investing money is important. You can start practising simple financial rules such as 50-30-20. 50% towards needs, 30% for wants, and 20% for savings/investing.
Final words
Overspending can lead to unexpected situations in life. Keeping a close look at your finances is important to save you from daunting situations. Make saving and investing your priority, and you might never find yourself under financial stress.
