We've arrived in 2011...Praise the Lord! We made it! Hope we did it without casualties. We've lots of reasons to thank God, that's an undeniable fact. Right from the moment the clock struck 12am on January 1, 2011 ushered in a lot of promises and good news, we just have to position ourselves to take advantage of what the year has to offer.
As we enter the promises and potentials of 2011, what do we intend to achieve in the year? What goals and targets are we looking at? Thankfully, the year's just started, we have time to figure things out but we should never forget that time waits for no man. Let's make hay while the sun shines.
Talking of making hay, I sent a new year message to a friend and in it I reminded him of the need to start saving and other benefits of being insured. I said, "Get ready to be insured." to which he replied "By God, you mean." What a cracker! We are in a new year and the beginning of another decade, a time which we cannot afford to make many mistakes, if any at all. What my friend fails to realize is that God being our insurance doesn't mean we should go to bed with fire on our rooftop! It would be fallacious if we let our faith prevent us from playing our part. After all, the bible even said in James 2:26, "faith without works is dead!" Let's not begin to make mistakes in the year, it's just to early.
It's imperative that we know what mistakes to avoid in our financial lives in 2011. Here are some financial mistakes we should avoid in 2011.
Not Having A Financial Plan
Like I said in my previous blogs, besides winning the lottery or inheriting a fortune or being born rich outright, financial success doesn't just happen. You work for it. Most people live from day to day adopting a "let's conquer each day as it comes" attitude with no clear plan in place to save for specific future events or protect their families from unforeseen circumstances. If you don't plan for events like buying a house, paying the children's school fees or getting married, you might not have the outcome you imagined. You can't just sit back and expect things to fall into place, if you're proactive about your finances, nobody will do it for you. You can't predict the future but you can be prepared for it if you plan ahead.
Not Paying Back The Money You Owe
One of the worse mistakes you can make is not paying back that you owe. This might be a large financial loan or a small personal loan from a relative or friend. Ideally, you should not get into the habit of borrowing but worse still is getting into the habit of not paying it back on time or even at all. Eventually, it all comes back to haunt you as no one will want to lend you money, even if it just to tide you over a difficult patch.
Investing In What You Don't Understand
What works for one person may not work for another as each person's risk profile, goals and circumstances, differ. In 2008, many people heard about the possibility of borrowing to buy the latest "hot" stocks; many un-informed investors jumped on the bandwagon without really understanding margin investing and were left in debt. Putting your money in investment vehicles that you do not understand or getting involved in some of those "get-rich-quick" scams can have devastating consequences. Invest only in what you understand and try to make financial decisions based on adequate research and advice from experienced and tested professionals.
Borrowing On Behalf Of Someone Else
A good friend asks you to help them get a loan from their bank. You then accede to the offer and borrow in your name on their behalf and sign off on the dotted line. Your friend may have very good intentions at the time of borrowing but if they should run into financial difficulty and fail to pay you back, you're liable to pay the loan back in full. If your friend or relation couldn't get a loan through a bank or other lender, there may have been a good reason for the decline. Be very careful in considering such a request if you're approached.
Ignoring The Stock Market
Even if you're one of the thousands of people that got burnt during the stock market crash, it's a big mistake to ignore it completely. With some blue chip stocks still selling at considerable discounts, it is an ideal time to invest. If you have been scared away from the markets, at least consider buying into a mutual fund. This way, your portfolio would be more diversified than buying individual stocks and this reduces your risk. Be careful not to speculate; consider your risk appetite, your time horizon, and your goals before investing.
Not Having Adequate Insurance
Most Nigerians are under-insured. Imagine the number of people who do not have even third party insurance for their cars.Not having adequate insurance in place can have devastating effect on your finances should you hit an expensive car when you are at fault. The bill could run into hundreds of thousands of naira. Yet, the simple payment of the annual premium could help one avoid this. Accidents do happen. Nobody wants to be left paying expensive hospital bills or witnessing a family unable to make ends meet because of the untimely death of its primary breadwinner. Make sure your health insurance is up to date and that you have adequate life insurance particularly if you are the bread-winner of a young family.
Borrowing To Buy A Car That You Can't Afford
borrowing money to buy a car, you're paying interest on an asset that starts to lose value from the moment you leave the car showroom. Of course, many people have no choice but to take out a loan to buy a car. Some vehicles are very expensive to buy, insure, fuel and maintain. If you need to buy a car and must borrow to do so, consider buying one that is fuel-efficient and with reasonable maintenance costs. Likewise, avoid buying a house you can barely afford. That way, your payments will be manageable and you can continue to build your savings and financial security.
Living Above Your Means
Living above your means can put you into a precarious financial position. Trying to have some-else's lifestyle is a big mistake. Living like an overnight celebrity could kill you financially! Many young people believe they should be able to move straight into a perfect apartment in a nice area with all the latest gadgets. The 3D LED tvs, the home theater systems, the cable systems and all that...This is a lifestyle you build up and strive to achieve usually through the dint of several years of hard work and savings, not an overnight achievement, I tell you.
Putting Money Above Everything Else
While most people don't do enough towards achieving financial success, there are others whose priorities have become so warped that money takes the first position in their lives. Remember that money is simply a tool, a means to an end, and should never be considered the end in itself. You can't just keep cash without doing anything with it, it's useful when invested, not just locked away in some airtight safe (considering if you have a safe in the house)
Let's make 2011 count folks, let it be a year of landmark financial achievements for you. My name is Olumide Ogungbemi, 07056989820 and 07033588160, and I'm with Standard Alliance Life Assurance Limited.
