Financial Mistakes People Always Make - Part 1

Hello my dear readers and followers and I hope you are all having a great time over there. I definitely hope you should. My writing today will majorly be focused on the aspect of finance management since every one of us really loves to make money and at the same time we also love spending money since we really can’t do without these two practices in the world of finance. I could remember having a lengthy conversation with my junior sister about how she’s going to spend $1000 if I gift her such amount on her birthday and guess what she told me, you won’t believe she told she was going to spend the whole $1000 on just food and clothes! I really don’t blame her for that decision though probably she’s a 15 year old girl and She’s really a foodie and the fashionista type of person but this doesn’t mean she should spend that whole $1000 on such things according to my view.

The astonishing fact is that we also have adults or grown-ups having the same type of mentality similar to that of my 15-year-old sister I wrote about earlier on, if you’re really doubting this I suggest you ask some grown-ups the same questions and listen to how they will squander the whole $1000 lavishly without any sense of financial management. I think one of the reasons for this is due to the fact that these set of people lack proper Financial Management Skills or training. This same $1000 when given to some people they will definitely make fortune out of it while some people will prefer to squander it all by spending lavishly on unnecessary things. This made me remember a financial quote written by Sunday Adelaja which states that ”Financial prosperity is impossible without constant planning and management of money”.

One of the best ways to achieve financial prosperity is to develop a constant habit of financial management as quoted below. There different ways to achieve this and one of the best ways to achieve this is to learn from the mistakes of others to avoid making that same mistake they made. This is why I’ll be sharing with you some financial mistakes people always make and I hope you’ll learn a lot from this post. I suggest you grab some delicious burger and chilled juice to enjoy as you read along through this post 😊

# MISTAKE NO 1: LIVING/SPENDING MORE THAN YOUR EARNINGS

The first mistake some people mistake is that they spend more than they can afford. This applies to people receiving stipulated amount of income either weekly, monthly or yearly. To understand this aspect better, i will explain using 25-liter bucket filled with water as an analogy. Let’s say you live in a house where there’s limited supply of water every week. You are entitled to fetch a full 25-litres of water every first week (Mondays), this simply means that you’ll have to manage the water for 6 – 7 days. Also remember that you are also going to engage in some domestic activities such as cooking, drinking, washing and bathing with this same amount of water within 6 – 7 days before you are entitled for another full 25-liters of water.

I know you may actually be thinking this is really impossible but the fact is that it is really possible if you don’t use more than 4 liters every day. This simply implies that you must always ensure you manage the limited available water you have and this will also make you avoid wasting your 25-liters of available water anyhow unless there’s need for it.

The 25-liters of water I was discussing about is your amount of salary you earn either every week, month or year and the domestic activities you use your water for is known as your needs or things you buy with your money. I always advice people to always try as much as possible to live within the scope of their earnings and avoid buying what they don’t need or things that doesn’t add any value to them positively.

In conclusion, always try as much as possible to live within your income no matter how much you are receiving as salary or earning annually. Always stay within your scope and avoid spending lavishly on things that you don’t need or thing that has no value to you because they tend to help you reduce your earned income. There’s also a high chance you start borrowing money from people or banks if you are unable to live within your confinement based on your earnings.

# MISTAKE NO 2: LACK OF SAVINGS

One of the world top millionaires Warren Buffett, once said “Do not save what is left after spending, but spend what is left after saving.” This has shown financial saving is extremely important in the world of finance and it is also a fundamental aspect or core of financial management. In fact, we can simply say that Financial savings is one of the important branches of financial management.
I will love to share an experience which happened between me and two kids while I was just having some little rest in a mosque. I met a handsome young boy known as Mahmud (5 years old kid) and his elder sister known as Aliya (7-year-old). I was really impressed by their good moral conduct within the premises and I decided to call them just to have some fun with them since I was a bit bored. We both conversed for some period of time asking questions from each other and they seemed to be responding quite well and this really got me impressed (I just love smart and intelligent kids).
I decided to give both of them some amount of money since I was about to leave the mosque and also their level of intelligence really got me attracted to them. I gave both of them few amount of money and I will never forget the reply the 5-year-old kid gave me back then. He said “I’m going to show this to my parent and after showing them my money I will save my money inside my kolo (saving box)”. I was a bit astonished by his reply when he said he always saves his money, I then decided to interrogate him more just to learn from him about his statement by telling him “I don’t like saving money because I love spending my money on biscuit and sweets”. He replied by saying “Ha Brother Debo! Don’t you know it’s a bad habit to always spend all your money? Always make sure you save part of the money given to you and don’t spend all your money on biscuit and sweet alone. You can split the money to half and buy few biscuit and few sweets while you save the remaining amount inside your kolo (saving box)”.

After hearing this my level of curiosity began to increase about how could a very young boy like this make such statement and why is he so obsessed with financial savings, this made me questioned him about why he loves saving his money and his reply was “My parent always advised me and my sister (Aliya) to always save our money inside our kolo (saving box) so that we will be able to buy anything we want when it’s time”

This simply implies that these kids parent knew the value of financial savings and this is why they are also trying to train their children with this great practice since it will definitely help them in future if they become use to such a lovely lifestyle.

It’s really astonishing most adults don’t practice the habit of savings as practiced by these young kids. Most people tend to use the money they are meant to save for improper or illicit activities making them waste more money on unnecessary things or items when saving such an amount of money will definitely be of great help to them when the time comes.

In conclusion, always save your money whenever you don’t have something important or valuable to buy. Always make it a habit to save some specific amount of money every month consistently and see what it turns out to be for you every year. I will end with Warren Buffett’s quote “ Do not save what is left after spending, but spend what is left after saving.”

# MISTAKE N0 3: LACK OF INVESTMENT

There’s this ubiquitous saying that “Never put all your eggs in one basket” and ”Don’t always eat with your whole fingers”. The above quotes all boils to the fact that in everything you do, you should always have a plan B. One of the best plan B you can have in the world of finance is to invest. Investment is actually a whole course on its own because there are things people don’t need to invest in but it’s quite unfortunate plot of people are investing wrongly making them loose their income and sometimes earning low ROI rewards despite the time and money included in the investment. I hope to write about this concept though and I hope you won’t miss it.

Your lack of investment may really make it very difficult for you to compete with great investors when it comes to achieving financial freedom. Investing should always be something you think about when you feel like wasting money sometimes. I am sure most of us might have heard or read about the Bitcoin Pizza story which we now celebrate as Bitcoin Pizza Day. The story was mainly focused on how Laszlo Hanyecz agreed to pay 10,000 Bitcoins just for two Pizzas from Papa john. The value of Bitcoin wasn’t really worthy as it is now, I think it bwas around $30 - $41 at that time but the astonishing part is that a young guy also bought some amount of bitcoin at that time with $1000 he borrowed from his mother or grandmother and he held the tokens for a longer period of time instead of selling the tokens for Pizza just like Laszlo did. I'm quite sure you can also tell who will be enjoying the millions from investment by now 😎.

In conclusion, always ensure you invest in assets that will fetch you a very profitable returns on the long run. Also, whenever you always feel like wasting your money on unnecessary items, always try as much as possible to invest such income on assets.

# MISTAKE NO 4: YOUR OPINION

As you all know me to be a voracious learner, I'll also love to read your opinion about the topic at hand which has to do with the the financial mistakes people make. This will not only be a means of learning to me alone, it will also be an opportunity for other readers to learn from your opinion. The floor is opened for sharing your opinions comments, suggestions and questions.

Thanks for your time and I hope you all have a great day ahead with love from @hardaeborla 💕💓❤

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