Industry experts say that financial literacy is more important than ever. Current political and economic climates have created shifts within the financial industry. While the market remains stable, adults should be more knowledge-savvy. This implies doing one’s due diligence and avoiding these five common financial mistakes.
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Paying debts with savings: This initially sounds like a good idea, but this is detrimental in the long run. Most people shave off their retirement savings, under the impression that they can easily fill the gap. However, even the most disciplined planners have difficulties placing money aside once the sense of urgency is gone. Most of the time, the pace just continues and people forget saving after the debt is paid.
Not having an emergency fund: This is not a nice thing to plan for, but the reality is, emergencies happen. People need to have an emergecy fund when the uexpected inevitably occurs. More importantly, these funds should not be supplemented by credit cards. These can add more to one’s debt.
Not budgeting: Again, a seemingly tedious task. However, analysts have found that people’s financial futures are highly dependent on their budgets -- or lack thereof. Present-day actions affect future financial status so it is necessary to begin budgeting now. Having a budget also helps people decide where they want to go in terms of their short- and long-term goals.
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Having no insurance: As with the emergency funds, these are important (though admittedly boring) tasks that all adults need to do. Insurance, whatever the coverage is, is essential to securing a stable and comfortable future.
Ignoring additional income opportunities: The previous four points were more of reactive measures, but emphasis should also be given on proactive action. Thinking that one’s current job pays the bill is enough is poor thinking. Nothing is guarenteed and there are many ways to earn additional income while still having personal time.