Middle-class families are almost always under financial pressure due to limited income yet too many responsibilities. Eventually, families do not have enough saved to pay for kids’ college and even to retire at 60. To relieve the stress and to improve the financial situation, it is imperative to avoid the below listed common money mistakes they usually commit.
Loose Spending and Impulse Purchasing: Many times we neglect to compare or find better options for a product we intend to buy. We hesitate to bargain at showrooms with grand ambiance. But, it is always better to research a lot before making any buying decisions. Not having a tight fist while spending the hard earned money makes us remain broke all through the life.
So, be wise in avoiding impulse shopping and loose spending habits. In simple, think twice or thrice before making any purchase. Ask yourself if you really need that item you wanted to buy and then take a well-informed decision.
Not Having an Insurance kit: No insurance means no cover or protection against unforeseen events like a medical emergency, an accident, a lay off etc. What if you are laid off, all of a sudden? Can you meet the heavy hospital expenses, if any of your family members gets hospitalized on emergency? Don’t your family shatter both emotionally and financially if you die due to an accident? Most middle-class families struggle to recover if they experience any such unexpected financial emergencies.
Thus, it makes sense to pay little insurance premiums on a regular basis to keep you and your family covered. Also, create an emergency fund worth 3 to 6 month of family income to sustain an emergency.
Dependence on Single Income Source: Depending on a single income source is the most common drawback for 90% middle class. Even if both wife and husband work, most of the times their earnings are enough just to make ends meet. Thus, they are more prone to debts, loans or borrowings, after which their earnings are diverted to interest payments.
It is always better to create multiple income sources. We should look out for more and more opportunities to earn. Extra earnings in free time drastically help reduce financial pressures and push savings.
Having No Proper Financial Plan: Every household needs to have a proper financial plan to lead a self-sufficient life till the end. To build a plan, one has to first identify all the financial goals of life, prioritize them and estimate the corpus required to meet each goal. Then dedicate savings for every goal.
Making Wrong Investments: Simple savings may not be enough to beat the inflation and build required corpus in the given time to reach money goals. Thus, investments in mutual funds are the best way to let savings grow with time. After considering all the factors like risk appetite, assets, liabilities, etc., a well-diversified portfolio has to be created and then mutual fund investments are to be made, for which an expert advice comes handy.
If you love to improve your financial quotient and get your family to an improved financial status, approach online advisories like ArthaYantra – World’s Full-Service Robo Advisory. Maximize your savings and lead a wholesome life!