People learn lessons from failures. But, when it comes to budgeting, you cannot really afford a lot of failures or else, your finances will end up broken beyond repair.
Unfortunately, it seems that Sri Lankan youths are making some costly mistakes in terms of their finances and some of these are the following:
Do you know the interest rate of your credit cards? Do you know how to calculate interest rates for personal and housing loans?
If you cannot answer these simple questions, then, you got a problem in your hands. It is actually shocking how even top ranking executives are not well-versed with basic financial details like loan debts.
You can avoid bad money habits if you educate yourself more on different financial topics. Being financially illiterate can hamper your growth and wealth opportunities.
A budget is basically a plan of how much cash flow you have and how you will spend it. Budgeting can help you keep track of your money so you know where it goes. If you don’t have a budget in the first place, you will find it hard to navigate your finances.
Similarly, you cannot just set a budget and expect to stay the same. Remember that your expenses and income can change every year. This means that your current budget for the month might no longer be applicable for the same month next year.
Prices and fees change constantly. To prevent problems with your cash flow, make sure your budget is updated regularly, considering any additions or deductions from your income sources.
When it comes to budgeting, you need to know how you use up your money and how much you spend for your cost of living expenses. Guessing or estimating your expenses will never work at all since you probably spend more every month than what you think.
It is always a wise idea to track your expenses first for one to two months before you set a budget. Take not of everything you spend your money on. This will let you see where your money goes so you can determine a realistic budget that best suits your situation.
Impulse buying is and will always be your wallet’s biggest and number one enemy. Whether it is a new pair of shoes on sale, the newest frappe in your favorite coffee shop, or any other impulse buys, you have surely become a victim of this at one point or another. Try to resist the temptations of impulse buying and stick to your budget as much as possible.
This is probably the most common mistake among many Sri Lankan youths. Just because you want to spend less and get serious about your money doesn’t mean you should just lock up yourself at home. Everyone needs and deserves to unwind every now and then. It wouldn’t be an irresponsible thing to have a bit fun with your money.
Your budget will never work long term when you don’t have some room for fun stuff, which can be something as simple as a chocolate bar once every week.
Avoid these mistakes and master the art of budgeting in no time!