5 Things You Should Avoid For Better Money Management16 Jul 2021
We all like to spend. You may already have plans on what you want to buy for the coming month, even before receiving your pay. You might even be tempted to pay in advance using your credit card and leave the repayment fret for another day.
All that is fine and dandy. Spending does feel better than managing it. But it is important to pause once in a while and assess your financial condition. We all have financial goals in mind so question yourself, are the financial decisions you make today, leading you to your financial goals?
The first step of any endeavour can often be the most difficult. Let us give a lending hand by looking at these common financial mistakes and use them to help you make better decisions.
1) Setting up too many goals
This is a common mistake for many as setting up too many goals at once can have you overwhelmed by your personal finances. Examine where you are and take the first step by planning for what you need the most now.
It doesn’t immediately need to be a long-term plan like committing to a car or house but it can be short-term goals such as tracking your spendings or achieving a 3-months salary worth of savings in a year. All these little goals prep you for bigger financial achievements in life.
2) Skipping on emergency savings
If you’re only budgeting for your spendings but not savings, you're at risk of being in a tough financial spot should the unfortunate happen. You may even be audacious about the amount of debts you’re building, which leads to you being too busy paying up debts that you neglect your savings.
You’ll be surprised how common this mistake is. Based on a 2020 report by the Department of Statistics Malaysia, 71.4% of self-employed Malaysians have savings of less than 1 month, while 82.7% private-employed Malaysians have savings of less than 2 months. If you’re a part of the statistics, then you’ll need to take charge today.
3) Not tracking your spendings
We normally purchase things without giving it more than a thought and this happens more frequently especially on small, trivial purchases. It’s best to practice setting a budget for yourself and track where your money goes. Track even small purchases like your morning coffee or occasional snacks that could potentially set your budget way off track.
Start small and set a reasonable goal for your expenses. If you’re too occupied to be tracking every expense, you can always refer to your bank statements from time to time to help you gauge. This process may be tedious but with constant practice, it’ll turn into a great habit that helps you with an overview of your spendings versus savings.
4) Postponing retirement plan until later in life
As we spend months after months on our job, much of our focus usually goes into settling our debts rather than planning ahead for our retirement savings. Retirement could seem like a long way ahead but starting early makes a huge difference especially given the time your finances are allowed to grow.
Recognising the importance of retirement planning, Gibraltar BSN offers a savings plan - Go LiveWell, that caters directly to your retirement goals. Not only do you get to enjoy long-term savings benefits with a short-term premium payment period, you’ll also receive life insurance coverage which provides a financial cushion for your loved ones in the event of your absence.
5) Not having the right insurance protection
Everyone has insurance but as our lifestyle and living conditions change with time, we may not notice that our insurance coverage has not kept up. Hence, having the right insurance plan is key to good financial planning as it prepares you for life’s unexpected events.
Having the right insurance plan will financially support you especially during medical emergencies so you can refrain from touching your personal savings. That’s why you should review your insurance policy from time to time to ensure it fits your needs. Check out our article on the types of insurance plans you should be considering here.
Chances are, you may have at least practiced one of the mistakes above but fret not, the key is to constantly practice and improve your money management skills. Remember, good money management goes a long way in helping you achieve your financial goals so give it the constant care and attention it deserves.