Consistently spending all you earn or more than you earn.

This single act alone can keep you working for years and retiring without any significant benefit to show for all the years of hard work.

You really have to make a list of expenses, plan how to reduce cost in order to have some sort of savings. Better still, invest the savings for more income. This is where budgeting comes in.

 

Spending money on items that you can do without

Truth is, as much as we have our needs that must be met, there are certain items we purchase that we can actually do without (at least for the time being).

Like economists call it, “opportunity cost”. Before any purchase, ask yourself, what will happen if eventually I don’t buy this item? Can I leave with the consequences? If yes, skip to the next on the list.

 

Thinking about the short term or long term only, without the other in view

While it is proper to have our priorities met, it is rather pertinent to consider these priorities in the long and short term. If you have money to purchase a piece of land as an investment for the future, and you end up throwing all you have into it without due consideration for developing the land to make it more profitable, or even considering how to sustain yourself and family during the period the land would eventually add some value, you will eventually end up being frustrated to the point of selling the actual land to survive. There by killing the initial investment plan. Suppose you had an alternative plan to cover short term expenses like feeding, children needs and other household items, while the land eventually adds value over the years. You would actually meet the purpose of the plan.

 

Paying a higher amount for something you can actually get lesser

Except you have attained financial freedom, it is wiser to have bargains for items purchased.

There are avenues to get things far cheaper than they are actually offered in certain places. Always look out for such so extra monies can be saved for some other use.Truth is we make this mistake all the time due to social influence or the pressure to be counted as elite. Getting a haircut in and expensive salon, shopping in an exclusive boutique, traveling by air, buying clothes in designers shop, you name it, the list is endless.

 

Avoid keeping money you don’t intend to use in the short term within easy reach

There are always expenses available to gobble any money that is within reach. Moving about with huge sums of money when you only need a quarter the amount isn’t a wise decision. There will always be temptation to spend a little extra as long as the money is within reach.