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Money at Home: 5 Mistakes to Avoid

04 May 2022

Money at Home: 5 Mistakes to Avoid | VI

You find yourself in debt and paying interest on loans – a situation that can last a long time. You might even need more loans to cover these loans. It seems like you have no choice but to continue getting deeper into debt now.

But how did you get here in the first place?

Maybe it has something to do with the fact that you didn't properly manage your money at home before.

Or maybe, you just didn't know how to manage your family's money in the first place. So, all you could do were work hard and save as much as you can but ended up making the wrong decisions.

One mistake people often make is to focus on short-term pleasures. They end up spending too much of their money on things that ultimately don't matter. In the long run, this leads to them getting trapped in debt and unable to pay for basic things like food, clothing, and shelter.

And sadly, IT. DOES. NOT. STOP. THERE.

Even more unfortunate is the fact that the above is not the only reason that causes most people to end up with major financial issues.

Here are 5 other mistakes we've seen a lot of people make when managing their money at home, which you should avoid doing, otherwise, it can cause your financial downfall in the blink of an eye.

1. Not tracking your expenses

It's easy to spend a lot of money on things that don't matter and it's even easier to become addicted to debt, spending more money than you earn.

A lot of people barrel through life with their finances in the negative, paying just the minimum sum of their credit card bills every month, yet continue piling on the debt as if nothing is happening.

They either don't care how much they're spending or they're afraid to even look at the numbers.

It is this mindset or behaviour which have led many families to be homeless, bankrupt, or unable to foot a hospital bill when disaster strikes.

Watch how money management should be a no-brainer, especially living in today’s world where inflation is at an all-time high.

Money Money Home | VI

2. Spend first, save later

Saving is great. Saving your money before you spend it is even better. But, for some reason, a lot of people have it the wrong way around. They'd spend the money they have before they save what's left. This is a mistake and is never effective because more often than not, you will spend the remaining amount of money you have if you see it just sitting there.

Instead, create an "untouchable" account – a bank account without an ATM card or internet banking so it'll be difficult for you to take money out from it willy nilly, and every month, you put a portion of your salary in before spending on anything else.

3. Treating insurance as a "waste of money"

Money Money Home | VI

Unfortunately, the concept and purpose of insurance policies are still lost on a lot of people today. And it doesn't help that most people would run away the moment they're approached by an insurance agent.

Think about life insurance for a moment. If your loved one dies unexpectedly, would you be able to replace his or her income? Would your finances fall apart? If your answer is "yes," then it's important to understand the role that life insurance plays in our lives. Life insurance is an essential tool for planning ahead and taking care of our families.

Those uneducated on the matter often have this idea that buying insurance is either a scam or a waste of money because it "may never be used anyway.”

This is the wrong way to look at this protection tool.

See also: What is the best insurance for parents?

4. Treating money as an “adult-only” business

At least in Asia, children are often told not to poke their noses into adults' businesses. This includes money matters.

The furthest we'd usually go in teaching children about money is how to save. And even then, most would teach their child to spend first and then save, which is the wrong way.

Your child is only as prepared for their future as you are willing to expose them to the real world. And by exposing them to money management at home, investment, and budgeting matters from a young age, wouldn't you do them a favour so they will be mentally prepared for what's to come?

Besides, these can all be easily achieved with fun games and simple explanations of how things work.

5. Having only one source of income

Money at Home: 5 Mistakes to Avoid | VI

We've all heard the saying, "never put all your eggs in one basket" when it comes to money because only that way can you lower your risks. But why are most of us still depending on only ONE source of income, i.e., our salaries from our day jobs?

We get it, work-life is hectic as it is. Even on normal days, it feels like your entire life is spent on the one day job you already have. Where would you find time to achieve more than one source of income?

This is where activities like stock investing come in – money you can earn and grow in the background while you're still busy working on your day job.

By investing with the right methods and right mindset, the passive income you earn over time may even overtake your salary someday.

Because of the lack of financial education for the general public, many of us still don't know how to manage our money in the way that's best for us.

And sadly, this is the reason why there are still many illegitimate entities out there who would take advantage of this.

However, by following the 5 pointers above, you can at least start better managing your money at home immediately and save yourself a world of trouble later. Remember, financial knowledge is key and it is much more important than the public perceives it to be.

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This article and its contents are provided for information purposes only and do not constitute a recommendation to purchase or sell securities of any of the companies or investments herein described. It is not intended to amount to financial advice on which you should rely.

No representations, warranties, or guarantees, whether expressed or implied, made to the contents in the article is accurate, complete, or up-to-date. Past performance is not indicative nor a guarantee of future returns.

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