4 Mistakes You Must Avoid With Your Money

Are you one of the millions of Americans who have thousands of dollars in credit card debt? Or worse yet, are you one of the Americans who made an investment and lost all of your money? Keep reading to prevent making these common investing and money mistakes.

If you ask the average person about the worries that keep them up at night, most will tell you that their greatest concern is always going to be having money to pay their bills and have enough to save for a rainy day. Specifically, people are often terrified about ending up in high levels of debt and struggling with bills that they can no longer afford or losing all of their money in a dubious investment. In fact, 189 million Americans have credit card debt with an average carrying $8,396. Approximately the total US consumer debt is $13.86 trillion. What does this say about our nation’s spending habits?

That’s why you need to make sure that you are avoiding some of the crucial financial mistakes when it comes to making large purchases on credit cards or investing significant amounts of money. Here are the ones that you need to consider.

Buying More and Risking More Than You Can Afford 

Whenever you take on new investment or a new large purchase, you always need to think about the level of risk that comes with it and specifically, how much you could stand to lose. It’s crucial that you think about whether you will be able to afford an investment going south. A lot of people see investments like gambling, but it’s worth noting that they should be more calculated than this. Investing in real estate or starting a business can be a strong opportunity to pursue if you can afford to take the risk.

You should always be thinking about the cost of an investment falling and what it would mean for you now and over the long-term. If you are worried about how dangerous an investment could be for you, then it is going to be worth speaking to a broker or an expert in whatever type of investment you are interested in making. They will make sure that an investment matches your financial portfolio.

Putting all Eggs in One Investment Basket

Some people feel more comfortable with certain investments compared to others and that’s completely understandable. If you know more about the property, then you might not want to risk investing in Bitcoin or something like the stock market. But what if your property or commodity investment fails? This is when you need to make sure that you are able to fall back on other options. You can do this if you have set up other investment channels. A financial planner will help you diversify your portfolio the right way and will provide guidance based on your age, career, and willingness to deal with risk. However, it’s important to note that you need to conduct the proper research ensuring the financial planner has a strong reputation and works with an ethical firm.

Preventing Hitting A Scam or Being Defrauded 

There are lots of financial scams on the market. Anyone who claims that they can help you get rich quickly is probably setting you up for a scam or trying to defraud you out of an investment. Ponzi schemes, social media scams, and more are some of the most common to note. Luckily, there are resources that will help you identify the scams. For instance, DTSS.us exposes Gates Foundations scam and similar issues for consumers on the market. This scam in particular was based on a charity asking for donations so it left a lot of people vulnerable.

 Doing Nothing with Your Money

Finally, you might think that the safest action to take with your money is no action at all to avoid any risk. People tend to assume that their money will remain at the same level if they do this. However, in an economic recession or a similar situation—like the COVID-19 pandemic, it’s common for savings to drain away and become useless. That’s why it’s so crucial that you are regularly using your money and investing, in even the most conservative types of investment vehicles such as a CD or a money market account. If you don’t want to be an active investor, use a savings account to grow the money for you over time. Just make sure there’s a positive return on your investment. 

We hope this helps you understand some of the crucial mistakes that you need to avoid with your money. By taking this simple advice, you can ensure that your investments remain fruitful and you won’t have to worry about debt slowly building beneath your feet or losing a massive amount of capital due to a questionable investment.