If you think only stupid people make mistakes, you are wrong. Everyone makes mistakes. But the smart ones acknowledge their mistakes and learn from them. The stupid ones do not. But what’s better than knowing what to do to avoid the mistakes before they happen?
Anyone who has never made a mistake has never tried anything new. – Albert Einsteen
While this is true, it doesn’t hold true for everyone. Smart people will make mistakes while trying out things they know if successful, will make them better. Stupid people try out anything that can give them pleasure. These are the 10 most common ways people will sabotage their lives in 2020.
1. Rushing Into Marriage
While marriage is a beautiful thing, it can make or break your future. Firstly, weddings are expensive, and divorces are even worse. And usually with people who rush into marriage, most of the time, one of them is in with a motive. It takes time to truly know someone yet still people will dive into marriage within weeks or months of meeting. Give yourself enough time to know someone in case Mr. or Mrs. Right turns out to be Mr. or Mrs. Wrong.
“Wise men say, ‘only fools rush in.'” – Elvis
2. Having Children Before They Are Ready
If you think coffee is expensive, wait till you have kids. While there’s no magic number for how much you need or how old you should be before having kids, some things are worth putting into consideration before embarking on that journey.
The first question you need to ask yourself is, “Have I met the right person to have a child with?”
Secondly, “I’m I financially ready?”
If the answer to either of these questions is no, it would be best to hold off having any children. Pay off your debt and have an emergency fund in place. Babies come with (unexpected) costs.
Additionally, some new parents are lucky enough to get paid maternity leave. But many aren’t. This means you and you spouse, boyfriend whatever may have to survive on one income for a while. Then comes the childcare costs when both of you have to go back to work. If you are sinking in debt and (or) have any financial plans, this could stall you tremendously.
First time parents mostly make horrendous mistakes of going into debt for unnecessary stuff; new crib, toys, many newborn clothes, etc. A newborn can’t even see you yet. Buy the toys when they need them. As for the clothes, buy wisely. You will blink and they can’t fit a leg anymore.
Secure your financial future, plan ahead.
3. Buying A House That You Can’t Afford
We all want to achieve the American dream; buying a house. And while this is a great accomplishment, most people don’t think long term. A house will be one of the largest purchases, perhaps the largest, you will make in your lifetime.
Some people will buy houses just because all their friends are buying houses. Others will buy huge houses for a status symbol; to keep up with the Jones’. Some will buy too much house, ‘for when family is in town’.
Some will end up buying too much house they cannot afford thus ending up house poor. You find yourself with no extra money to pay for emergencies or even enough money to cover your expenses and save for the future because your mortgage payment is too big.
You think: “I’ll get that back by building equity as I pay off my loan!”
Your house payment should be approximately 25% of your take-home pay.
Just because you qualify for a $500,000 mortgage doesn’t mean you should buy a $500,000 house. After your mortgage payment, you will end up house poor with no cash left over for savings and other vital needs.
If you’re justifying the purchase with the “I just want to stop throwing away rent money,” you will engage in a stupid money move that only sounds smart because you haven’t worked out the math.
4. Buying Or Leasing A Car
Don’t waste your active income on stupid purchases. Many people will work extra hard in 2020 only to waste that hard earned money on a brand new car. Others will go in debt financing new cars.
Just because you qualify for a car loan doesn’t mean it’s a ticket to getting a car.
A car is an expense, not an investment. Why waste your savings on something that will lose its value almost immediately after you drive it off a dealer’s lot? Instead, buy a cheap used car. Put the rest of the money in investments that will generate you passive income.
The ones who will be leasing will argue, “I get to drive a brand new car I cannot afford at a lower cost, every three years”.
Remember, a poor man buys things he can afford while a rich man invests in things that will afford him the things he wants, passive income.
Therefore, the stupid ones will take out loans on expensive cars and make huge monthly payments while the smart ones will instead make monthly investments in things that will make them money and use earnings from that growth to buy a car.
5. Thinking a College Education is the Key to Success
I grew up being told, “Education is the key to success”. While I do not refute this, I beg to differ that ‘Education is not the only key to success”. Kids are being infused with this mentality that without a college degree you are nothing. Thus they will do all it takes to get a degree, no matter what, in any major. This means taking out student loans to finance their degrees, because it’s the society norm.
When it comes to a career, there’s nothing like ‘follow your passion’. You follow the money.
You follow your passion with hobbies, the things you enjoy doing, not necessarily expecting a financial reward in return.
Go ahead and pursue your education, it is worth it. Just don’t think it is the only thing you have to do to be successful in life. If you have to take out student loans, think about what you are going into debt for. Are there jobs in that field? And if there are, will they pay well enough for you to pay off the loan while also saving and investing for the future?
6. Flaunting on Social Media
If you have to break the bank to have the perfect Instagram photo, you have a serious problem. People will go into debt to please strangers and people they don’t even know. On social media you are ‘the rich doing well friend’ but in reality you are drowning in debt for buying things you cannot afford just to please people.
“If you will live like no one else, later you can live like no one else.” – Dave Ramsey
There’s nothing wrong with posting on social media. It’s a problem when you have to go broke for likes and followers. The world doesn’t need to know every little bit about your life.
7. Thinking Being Frugal is Boring
When people think of what living frugally means, they imagine locking themselves up indoors and not going anywhere for fear of spending money. You can still be frugal while still enjoying life, with limits by deciding what’s important to you in life and choosing to spend less on the things that don’t matter.
You have to get uncomfortable before you can live comfortably.
8. Being A People Pleaser
Friends are good, but not all friendships are good for our finances. The fear of missing out is fatal. Some of you have friends who go out four nights per week, and want you to come too. You know your budget is tight but you fear missing out or being called ‘the boring friend’. So you strain your finances, tagging along every time.
Just because your friends can afford to go out several nights a week and spend hundreds of dollars on entertainment and dining out, it certainly doesn’t always mean you can. You may not know their financial situation. They may have that extra cash to spend or may be racking all these bills on credit cards.
Have a financial goal and stick to it. Establish boundaries and decide what you can and cannot afford. Real friends will understand your limitations and try to accommodate you. So, if you run into a friend who only wants things their way, they are a threat to your financial future and it may be time you drop them.
9. Failing To Budget
When you don’t have a budget, you don’t know what your expenses are. It far too easy to spend more than what you make, and surprise expenses can throw you off track. You also have no idea how much you could be saving.
When you create a budget every month and track your expenses, a “surprise bill” can’t possibly throw you off track. Why? Because you knew it was coming and included it in your budget.
Budgeting is a good step to securing your financial future. It may feel like an extra task or a self imposed restriction on your finances, but remember, if it doesn’t hurt, you are not doing it right. Start budgeting now.
“The best time to plant a tree was 20 years ago. The second best time is now!”
10. Not Saying No!
You can’t help someone else if you can’t help yourself first. Similarly, you can’t help someone who is not willing to change.
If someone, even a close family member, asks for money, remember your finances come first. If you’re behind in your retirement savings or are drowning in debt, you need to put your money issues first.
Helping a family member cover an emergency is one thing. But giving money every time the person asks for it is enabling the person and not helping them.
If your family members’ dependency arises from financial irresponsibility such as racking up credit card debt or lack of budgeting, instead of offering cash, offer to help them draft a budget, save or invest. This is will help them long term.
Give a man a fish and he’ll eat for a day. Teach a man how to fish and he’ll eat for a lifetime!
