Many people are looking for ways to create new income, save and make more money, but not everyone makes the best decisions regarding their finances. Even if you have good intentions, you might be making some big money mistakes when it comes to saving or spending money. There is need to pause, ask and understand the mistakes we might be already making.
1. Not Budgeting Cash Flow
The most important thing you can do with your money is budget it; account for everything down to the last cent. Many people may think that as long as they monitor their income and spending, that they will be fine, however this is simply not true. It may seem like strange but sitting down and seeing where every dollar or shilling comes from, how often it comes in will start to make you think more closely on whether you are not spending too much or saving too little. In addition to your income and miscellaneous spending, you should also be accounting for the debts you owe, insurance policies, student loans, taxes, and more.
The more thorough your budget is, the easier it will be to prevent yourself from spending money unnecessarily or putting too much money into your savings account, and not enough into your operations to an extent that you live a miserable life because of too much saving
2. Spending more Money than You are Earning
Not having an appropriate budget can mean you are spending more money than you are making each month without knowing it. After taxes, paying bills, and setting aside some money for your savings, the money you have left is considered your disposable income. The disposable income can be used for food, going out, entertainment, or for irregular expenses repairs, communication expenses and so forth. In order to make sure you are not spending over your monthly disposable income, budget your expenses for each month and subtract the necessary payments you will have to make. After that, anything that is left can be used for whatever you want. You can get more information on managing money from https://www.wikihow.com/Category:Managing-Your-Money.
3. Not Having an Emergency Fund
It may not seem like such a big deal, but having an emergency fund can be a big deal. Your emergency fund should be liquid cash that you can keep safe at home or in a form that is near cash so that you can access whenever you need it. Lance Cothern argues that “Emergency funds are the backbone of strong personal financial plans” Financial planning experts recommend having a few months’ worth of money from your income to put in your emergency fund. This fund will be available to you for a dry spell to pay for emergency medical expenses, in case you lose your job, or if you are short on cash when paying critical an avoidable bill. No matter what your emergency fund may be, not having a fund specifically for emergencies is a big money mistake.
Give Africa Training Institute advisers are dedicated to provide some personalized discussions on financial matters.
Dr. Charles Barugahare (DBA, FCCA)