“I have been working for 20 years, yet I have very little cash in my savings.
Sometimes I wonder where all of my money have gone to” - Hjh Normah, Housewife
Does the above statement sound familiar? If you ask around, you are sure to
find at least one person you know, who share the same sentiments as Hjh Normah.
If you are thinking of improving your financial health, first, you need to be
able to recognize your financial mistakes so that you can learn not to repeat
them.
Here are some commonly made money mistakes that everyone should avoid:
1. Failing to Planning
If we carry out a survey on the people around us, we would be sure to find that
not many of us plan our finances. The most common response that we can
anticipate would be the classic excuse “We are just too busy with work and
family that we hardly have any time left to do the planning”. As a result, most
of us end up paying higher taxes, leave our savings sitting silently in lousy
investments for years or overpaying for financial products. Since there are
always deadlines to be met at work, we tend to let our finances run its own
course, thinking that it is of lower priority as there are no deadlines to meet
nor is there anyone to force us to look into our financial plans, unless of
course we run into serious deficit.
However, the important point to note here is that PLANNING is typically found
to be a strong habit among people who have successfully accumulated wealth,
even with just a modest income.
2. Spending Beyond Our Means
Nowadays, we constantly overspend due to peer pressure and consumer temptation
that surround us on a daily basis. We are, to a certain extent, exposed to mild
brainwashing with TV commercials, newspaper ads, sale circulars, and flashy
shopping malls promoting the lifestyles adopted by the rich and famous, which
of course involves having the latest mobile phone models, the latest luxurious
cars, latest fashion trend. All these tempt us into spending exorbitantly and
unnecessarily. The signals we get from not jumping on the bandwagon is that we
will be considered left out of today’s scene. However, in order to do so, far
too often, we end up spending way beyond our means. We will find that at the
end of each month, the net salaries that go into our bank account are usually
meagre, after servicing our car loans, housing loans, credit card bills and
other utility bills.
3. Spending Future Money
Buy now and pay later! This has become a norm nowadays and the credit card has
become a must-have item in our wallet. In fact, a lot of us carry more than one
in our wallets. No doubt it is a convenient item to have around, however, some
of us misuse it and treat it like a vehicle to spend our future money at will.
It has become a common phenomenon where, by just settling the minimum payment
at the end of the month, you will buy more now. As a result, the credit card
bad debt snow-balls to an extent beyond our control. According to the
bankruptcy report, the percentage of people declared bankrupt due to default in
credit card payment has increased in the last few years especially among the
younger age group. Be wise when using credit card. Making minimum monthly
payment on credit card debt allows you to buy more now, but it will cost you
dearly in the future.
4.Delaying Saving for Retirement
Most of us aim to take up early retirement. In order to achieve this, we need
to plan our finances to make sure that we have enough savings to sustain the
life style that we desire even after retirement. However, many of us find that
even when we approach retirement, we still struggle to meet the savings target
that we have set for ourselves earlier. As our income grows, our savings are
supposed to increase as well, instead, we more often than not, have big items
to spend on, i.e. house upgrading, new car purchase, club membership to keep up
with our peers, etc., that prevents us from depositing more into our savings.
5.Investing in the Wrong Products
There are various kinds of financial products in the market. However, in order
for us to identify the right product that suits our risk and return profile, we
need to equip ourselves with some basic investment knowledge and do the
homework ourselves. Instead, most of us end up investing in some products,
simply because we rely too much on the financial advisers, who might have the
agenda of pushing higher sales for their products and therefore providing
misleading information to us. It is always important to study the product
characteristics or the management team track record before investing.
6.Not Saving for a Rainy Day
Some of us think that purchasing insurance is a waste of money. However, we are
vulnerable if we and our family do not have insurance to cater for any loss of
income. In the event of some unfortunate incident, especially those affecting
the family’s bread winner, without any cash reserve or insurance, it will be
devastating to the whole family. By then, it would be too late to start
thinking of income replacement.
7.Focusing Too Much on Money Matters
All the above tell us to focus on our finances. However, on the other extreme,
we must also not be too engrossed in accumulating our wealth to the extent that
we lose sight of other priorities in our lives. While we plan our financial
health, we must not neglect our own health, family and friends, career
satisfaction and fulfilling interests. Without these, even with tons of money,
we will not be happy.
Lastly, we need to remind ourselves of the importance of planning our finances.
If we are not fully, totally and truly committed to creating wealth, chances
are wealth will remain estranged to us.
--
Muhammad Khalidi Ramli,
Chief Executive Officer,
NH ARIES SDN. BHD.(787182-W).
www.kowasa.org
BLOG:
www.kelabperantaujeli.wordpress.com
Life is constantly testing us for our level of commitment, and life's greatest
rewards are reserved for those who demonstrate a never-ending commitment to act
until they achieve. This is the common denominator separating those who live
their dreams from those who live in regret. Work SMART:
Specifically,Measurable,Achievable,Reasonable & Timeliness.
