No one knows what tomorrow can bring. So it is possible that some of the decisions you make today have positive outcomes and others do not. We have all made mistakes with our money at some point and have fallen into different traps.
If we go back to that moment, we realize that there were indications that things might not work well, but we ignored them.
So the next time you make a decision about your money, think about whether you’re about to make a mistake and fall into one of the big traps of personal finances.
Here are 5 big pitfalls that you have to avoid in order to have a more prosperous future:
1. You get influenced by someone who does not know what is all about:
Often people do not make the wrong decisions just “on their own”. They are influenced by someone close: husband / wife, parent, friend or colleague. It may happen to ask for an opinion and get a total misconception. Or get the advice without asking for one. It’s one of the big traps where you can fall even if you do not realize it.
Just because someone close to you is making a certain investment does not necessarily mean it’s a good decision. Or, more than that, it does not mean that you should do exactly the same thing. Sure, it does not even mean that the advice of those around you is totally wrong only because they are not finance specialists. But it is important to think about who is the one who tells you what to do with your money and what confidence you can have in his opinion.
2. You are not informing yourself
If you do not take into consideration what can happen if things DO NOT go the way you think, then you are about to fall into one of the big pitfalls.
People would have much to gain by improving their financial education. A study conducted in the US in 2014 shows that 41% of those surveyed believe the correct score for their knowledge of personal finances is the maximum mark of 7. Moreover, 69% of Americans aged 18-34 have never done a course or seminar on money management.
In other words, many people have major deficiencies in knowing about money and how they “work”. “Some spend more time looking for a new barbecue than informing about what type of mortgage they should do for the home they want to buy,” says Randy Kurtz, the manager of a Chicago financial advisory firm.
3. Buy things without practical justification
You have to realize the great difference that exists between what you “want” and what you really need. Regardless of the nature of the object we are talking about, whether it’s a refrigerator, a CD player, a mobile phone or a car, the temptations you’re undergoing are big traps and it’s not always easy to resist them.
However, you must keep in mind the reason why you need that object, that is its practical utility. Do you really need all the features and facilities that it offers you, or do you just like it because it’s the hottest? Because, if so, you are about to fall into one of the great pitfalls for your prosperity.
4. Get into panic and do something under pressure
You’re never compelled to react for the moment. You can be stressed and still make good decisions. But if you feel that your heart is crazy and your mind can not focus on anything, you should probably delay the decision you need to take and remember that “the night is a good counselor.”
Whether there is a negative or a positive event (both can put tremendous pressure on you), try not to make a financial decision on the spot. It is good to distance yourself a little bit, see things in perspective, and find out what people you trust are thinking. Emotions can distort your perception, and it’s easy to fall into traps you could otherwise have avoided.
5. The instinct tells you “no”
Just think a little: why does your instinct tell you that spending money in this way is a mistake? Is not that one of those traps you should avoid? It might be so … So do not ignore it and think again if what you are going to do is really a good idea.