Common mistakes on your personal finance
A lot of people often make serious mistakes in their personal finance that could easily be remedied with some financial knowledge without necessarily having enormous wealth. These mistakes consist on leading a lifestyle beyond your financial limitations, not saving money and, thus, not having an emergency fund or the capability to use this sum of money on a future investment. Things like that take their toll and weaken our domestic economy, leaving us vulnerable in times of need. Let me point out some mistakes people make in their personal finances and should be avoided:
Living above your limits
Spending more money than the amount you get, or automatically switching to a very high standard of living when there is a temporary income that create the illusion of wealth. In order to hold your financial security, you should avoid large expenditures and not be tempted to waste money or seduced by unnecessary luxuries you can not afford.
Not saving money
This is something that many people fail to do. Saving is the basis for maintaining your purchasing power in the long run and also serves to make investments, which are those that bear fruit later in the form of new yields.
Absense of an emergency fund
It is quite common in families to live by the day, spending all the money they have and never saving anything for future emergencies. However, thse emergencies are more common than you may think: medical expanses, home renovation or repairs, the need of new home appliances etc. Having an emergency fund is nessecary in times of need.
Having a single source of income in your house
Earning money from a single source of income is a very high risk to your personal finance because in the face of an absence of this source you would be left with no income. Furthermore, having more than one source enables to save money up, create your emergency fund or even invest and get more money than your original capital.
Being selfish in times of need
Not seeking help or advice when in a financial doubt or when not dealing with taxes, getting carried away by the inertia of the day or postponing our decisions, takes its toll in our domestic economy.