Personal Finance

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Common Mistakes to Avoid While Planning Finances

26 Jun, 2017

All it takes is gradual pace and consistency to create wealth and to do the effective financial planning. Right from setting up the goals, regular savings, making investments, to safeguarding your assets, there is a lot to do while planning the finances. However, lack of knowledge and poor planning can lead you towards the pit of mistakes. Read here and find out the common mistakes that you must avoid while planning finances in a spreadsheet.

No Real Budget:

Having no substantial budget can fetch you nothing but a handful of disadvantages. First and foremost, you may end up spending excessively where you shouldn’t. Secondly, you may not spend a bit where needed. Despite your hard work and consistent income, this can create a huge problem for you in the future. Thus, it is important to have a budget that would include your earnings, affordability, and expenses.

Wrong Investments:

Investing your money in lucrative schemes is not at all a bad idea. In fact, investment is considered as one of the best ways to plan finances. However, it’s the wrong choice that may push you towards glitches. While planning your finances, don’t go for the investments that are out of your budget. Plan the amount that you can invest in each instrument and make sure that you are left with enough money in the end.

No Emergency Funds:

Sure, the ATMs and the easy withdrawal facilities have made it easier to have access to the money lying in banks anytime you want. But, think about it, what if an emergency crops up at an odd hour of the day and you are unable to withdraw money from the bank or the ATM because of some reasons? In such a scenario, you must not avoid the necessity to keep emergency funds at home. Thus, don’t forget to make a place for them while making financial plans.

No Place for Insurance:

Nobody ever plans about accidents or deaths. But, the truth is that these are the situations that cannot be ignored either. Most of the people live with the belief that nothing can happen to them; hence, they don’t create a place for such kind of expenses in their financial planning. And then, they end up regretting their decision. If you are the bread earner and have dependents, you cannot ignore the need of insurance at any cost.

Ignoring Non-monthly expenses:

These are those kinds of expenses that come once a year but leave a big hole in your pocket if you haven’t addressed them beforehand. Expenses like yearly holidays and vacations should be counted in your financial planning as well. Estimate the entire amount, divide it with 12, and set aside that amount every month for your holidays.

While creating a financial plan, these are some of the most important points that most of the people tend to forget. If you don’t want to experience hassles with your finances in the future, it is time to acknowledge these aspects as well. So, the next you sit to create a spreadsheet, don’t forget to mention these things.

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