A number of studies have demonstrated a recurring link between financial worries and mental health problems such as depression, anxiety, and substance abuse. Financial problems adversely impact your mental health. Here are ten financial mistakes you must avoid in 2022:
- Participating in Ponzi Schemes
The high level of inflation in the economy has forced people to engage in anything that seems to provide quick money. A lot of scammers have seized these opportunities to come up with different schemes to dupe ignorant people. Before engaging in any form of business with a company, ensure they have a license, ensure they do not offer ridiculous returns, and ensure you understand exactly what the company does. This will save you from financial problems in the future.
- Making assumptions that the economy will get better
There is no factual indication that shows that the economy will get better over time or that Naira will appreciate in value. Therefore, when making financial decisions ensure that you put into consideration the situation of the economy. Hope is not a strategy, preparation is.
- Not spending money on Ads
If you are running a business and you decide to cut down on your advertising budget, this would be a big mistake because advertising is the best way to effectively communicate with customers. It creates awareness about your brand and the variety of products you offer. When an advertisement is good enough, it can turn the audience into customers.
- Not Saving
Always save three to six months of your salary in a savings account like savers club or your bank. The essence of this is that in case of any emergencies, you have access to liquidity. Apart from this money that is saved up, your other finances should be used for investments so they can yield high returns in the future. Every year you are losing the purchasing power of the money you keep. So, you must always look for ways to increase it.
- Being Budget less
If you don’t have a budget for a project, the chances of budget overrun is very high. Always ensure you budget your spending.
- Not investing in personal development
Quite a number of people hide under the facade of poor income and refuse to find easy ways to improve themselves. They neither read books nor attend free webinars. This is a big mistake. In order to be successful in life, you must be knowledge-driven. You cannot deliver what you do not have, your outward manifestation is a reflection of what you have on the inside.
- Investing without having a deep understanding of the business
Before investing in any business, you must ensure you understand exactly what the company does. You can decide to do an internship with the company in order to understand the business better. Every business has a learning curve. Having a deeper understanding of the business will help you make better investment decisions.
- Missing out on real estate investment opportunities
Real Estate is an asset that always stays consistent. As inflation bites into the cost of materials, the cost of real estate increases, thereby yielding more income for the investor. The best part about investing in Real Estate is that you can always collaborate with other people by collectively investing in a property and splitting the profit at the end.
- Not digitalizing your business
The world has changed tremendously since the pandemic and people are becoming more aware of the need to be savvy with technology. The business landscape has changed and in order to stay at the top of your game, you must promote your business in the digital space.
- Not understanding the concept of asset allocation
You need to understand some concepts of asset allocation like, how much money you should put in a fixed income instrument, how much money you should put in equity, how much money you should put in real estate etc. If you are interested in learning more about asset allocation, you can request a copy of our e-book on “Personal Finance the Money Cost”. There is a whole chapter there that explains the concept of asset allocation.