A true but sad story of a “sane” person succumbing to the “insane” herd mentality…
Financial Security Mistakes he fell for:
- Thinking the house that they lived in is an investment
- Spending more than the income you generate
- Making plans expecting things to turn out 100% (i.e. nothing goes wrong)
- Trusting your financial future based on some one else’s advise
Stretching yourself financial is never a wise idea, especially if you do not have a financial reserve large enough to sustain your outgoings for at least 3-6 months, preferably more. (this is what many call the ‘sleep at night factor’)
Things you can do to avoid falling into this trap and ensure your Financial Security
- Never spend more than what you can afford
- Always have a financial reserve (aim for 6 months of expenses,
- preferably more)
- Never risk more than what you are comfortable in losing (i.e. don’t bite
- off more than you can chew)
- Always plan for the worse and hope for the best
- Eliminate unnecessary expenses
Remember, Cash Flow is King!
Make sure you have more cash coming into your back pocket (income) compared to cash leaving your back pocket (expenses)
Tags: Financial Security