How To Avoid Common Money Mistakes

We often wish to make the best decisions when it comes to our finances. When we make these decisions, there are many factors that we should weigh prior to making a final decision. Most times, we prefer to see growth in our income versus depletion of our income and since maintaining a level of comfort comes naturally to us, we decide things rashly to keep our money. The author of this article gives us things we should consider when we make these decisions so that we can avoid making mistakes.

  • Preparing for purchases and investments by considering the losses and gains.
  • Making decisions solely on what you are interested in or have researched rather than to follow the choices made by those around us.
  • Taking an objective approach to our decisions even if the consequences of our decisions are less that favorable.

Taking the time to understand the way we think about our finances may help us to consider these aspects before we make any financial decisions. When we take a bit more time to weigh our options, we may find that we can make better investments or have a better outlook about financial circumstances that are not in our favor.

Key Points:

  • 1As human beings, we deal with losses emotionally, even fiscal losses, which can make us do foolhardy things.
  • 2All of us want to feel accepted by the “in” crowd and sometimes this leads to us doing things with our money that we should not.
  • 3While it’s important to have choices for wealth-building, sometimes the mere fact that there are numerous choices can be overwhelming, leading to paralysis.

Most of us want to be good stewards of our money and make smart money decisions that give us a good cushion for our retirement, yet most of can fall prey to five common money mistakes: Loss Aversion. Confirmation Bias. Herd Mentality. Choice Paralysis. Anchoring.

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