Six months already gone! I can still remember vividly when we were saying “Happy New Year”, now we’re half-way into the year. This shows the need to be intentional about our finances: otherwise, we would keep postponing our actions while time flies so quickly.
In our journey to wealth, there will be some money foxes that subtly creep into our finances and would frustrate our efforts into financial growth. In today’s post, I am sharing some of these money foxes that we need to be aware of and how to avoid them to grow our finances with ease.
Emergencies- Unplanned expenses like car breakdown, unexpected hospital bills and other unexpected financial obligations can have a huge impact on our finances. Hence, to forestall emergencies messing with your wealth, it is wise to create an emergency fund. An emergency fund is a cash reserve that’s specifically set aside for unplanned expenses or financial emergencies. Experts advise that this fund should consist of at least three to six months of your basic expenses. You can also build up your emergency fund with unplanned income such as bonuses, cash gifts or over-time pay. Just ensure you have a cash reserve to deal with financial emergencies.
Inflation- Inflation is a general increase in the prices of goods and services. While your money doesn’t reduce (literally), the purchasing power of your money reduces. To deal with inflation, bulk-buy your non-perishables or bulk-buy with your friends. This helps you gain some little savings from the constant increase in prices. Also, ensure that a percentage of your income is invested in investment products with returns higher than the inflation rate.
Black tax- Black tax refers to the financial support income-earning individuals are expected to give their immediate/extended families. While it is good to support your family, you need to put a balance between this and growing wealth. To deal with black tax, allocate the maximum amount you can spare from your income periodically towards supporting your relatives. Establish your relatives if it is in your capacity to do so, this reduces their dependency on you. Also, encourage them to gain financial independence and don’t indulge them.
Ponzi schemes- Get-rich schemes that promise you quick and very high returns with less risk or effort are usually too good to be true. If you don’t want to lose your money, stay clear of such schemes, and do your due diligence well before making any investment.
Impulse spending- One easy way to prevent you from building wealth is by spending impulsively. You cannot take away discipline from building wealth. While things may seem attractive to you at any moment, if it’s not on your budget or within your financial capability at that moment, you may have to hold on with that purchase. This is where delayed gratification comes in.
I hope these suggested tips help you deal with some top money foxes that can prevent us from building wealth.
To your financial independence and freedom!