As we leave adolescence and begin our adult life, we probably have an attitude of wanting to take over the world and set many financial goals, especially if you are starting a job or your own business and income is flowing.
However, there are many financial traps along the way that we must avoid, or they would end up costing us a significant part of our effort and work.
Trap # 1: Buying a Car Outside of Your Budget
Either because you want to buy a new one, and it really is much more expensive than a used one, especially being the first purchase.
Or because you definitely say ” it is best to buy a used car “, but you do not take into account the recommendations to acquire a good car, even one that does not spend so much money on parts and repairs.
Because a used car definitely saves you money on the initial purchase price, but it can also turn into a headache .
Buying a car is one of those decisions that one should not take lightly.
However, the vast majority of people buy a car according to their style, how other people will perceive it, what co-workers, neighbors, the boss will think …
… People who don’t even care what car they buy, what color it is and what style it is.
And they also end up falling victim to dealer tactics to sell options or features, which ultimately end up being irrelevant.
So knowing this is a big financial decision, and a significant money commitment, I shouldn’t fall into the trap of getting a car that is really out of my budget.
If I am going to finance it (hopefully not), at least take into account a formula, but preferably I should do what I can to save the money and pay it in cash.
Trap # 2: Buying a Home Out of Your Budget
Many people think that any house is an asset, it is a great investment, it is an excellent opportunity to grow your wealth.
And therefore, practically the moment they find a house that they fall in love with, without consciously or technically analyzing the conditions of the house, and so on, they already want to buy it.
They probably feel good to visualize themselves living in it (especially if it is a large and comfortable house, well located), and as we have always been told that a house is the best we can buy in life, which is basically the main purchase that we go to be carried out throughout our lives, there are really many people who end up squeezing and borrowing too much from the bank to end up paying very high installments, which would not be compared to those of a rent.
Even sometimes paying more in interest per month than a rental would cost, both expenses totally lost and thrown away.
And sometimes for an asset that is not necessarily going to be valued, because many times people buy a house for example $ 100,000 dollars, and after 10 years they sell it for $ 140,000 dollars, thinking ” The house was valued ” …
But if we compare that with inflation , the house probably did not appreciate but was left at zero, or suddenly it even lost a little value, that depends on the sector.
That is why we must really think very well that a house, being such a huge purchase, even much larger in amount than that of a car, must also be something very consciously planned .
This is where you are really going to acquire an obligation, even for 20 or even 30 years in certain countries, so it’s worth thinking about.
Trap # 3: Finding You A Costly Partner
As funny as it may sound, this is huge.
A couple can be very thrifty, money conscious, not really wasting on unnecessary things …
Or it may be that you like luxuries, tastes, that you don’t mind spending all your time .
And the safest thing is that regardless of whether the two have income, whether each has relatively control of finances, that one ends up influencing the other .
If you are a conscious person with money, financially intelligent, who knows how to handle it, who knows how to manage it, who has savings, who has investments and so on …
And you consider that you can positively influence the financial life of the other person, that’s fine.
Or if the other person in some way or another is already good with money, that will empower you and will propel you even more towards success.
But if that person really has a strong and negative character about money, it is almost likely that later it will become a problem .
In fact, money problems are very commonly one of the main reasons for breakups.
Of course it is never easy to identify these traits before committing to a person, but for that there are periods of adaptation, of getting to know each other, of coexistence in which one suddenly says: ” ok, I’m ready to commit “, And the financial part should be critical, even if everything else is fine .
Trap # 4: Spending Too Much Money Eating Out
Basically the 2020 pandemic has taught us that practically everything we can do at home, cheaper, we can buy certain products in the supermarket and prepare ourselves without so much problem.
You have to understand that restaurants, cafes, any food place, have a profitability of 50%, sometimes even more ; and now with the mandatory security measures that governments have imposed, where they have to assume more expenses and more costs, including home expenses… This is where these products are going to be even more expensive .
If I can prepare many of them, at least most of the days, and not be spending every day at homes and on orders, the most likely thing is that it will save me such significant money that it will truly have a positive impact on my finances. .
But many people, especially young people, are addicted to ordering food all the time, and never preparing at home.
Not bad of course, occasionally ordering a pizza, ordering a lunch if you are very busy, especially if it is for work, or something …
This is perfect, I occasionally do it myself, maybe two or three times a month.
But there are people who spend up to 30% of their income solely on this and it really is not worth it.
Trap # 5: Borrowing For Absolutely Unnecessary Things
Buy an iPhone with 24 installments with a credit card, at the most expensive interest rate that exists, just what for?
To have the latest technology, it is supposed.
And after those 24 months paying on credit, the phone is already obsolete, you have to sell it, change it for another, and this mentality comes that things really do not work and you have to constantly replace them.
Or that you always have to have the latest, even if it means being in debt.
If you do not have to buy such equipment for cash, you should really think about something cheaper because it is going out of your budget .
Credit cards are definitely useful for many things if they are paid in one installment, but dragging interest at the maximum rate that exists, definitely does not make sense and is a total trap in which many young people fall, and then end up unable to pay, reported in Datacrédito, hating banks and credit cards …
Only because of that ignorance of not knowing how to handle an excellent product like this to leverage and grow, instead of to spend and to lose.
Many of these ideas can be implemented at practically any age.
Moreover, the idea is that you acquire your own criteria, so that you identify which are possible traps, which decisions you should really make to improve and grow, what things bring you closer to your ideal life, to the abundance you want to create, to the path of financial freedom you want to achieve (assuming that is your goal), and what things really take you away from that before.
If you develop that criteria and can forge in your mind a strategy, a structure to make those decisions, you truly have what it takes to grow and achieve success , your success becomes only a question of when , not if you will be able to. or you won’t be able to do it.