Hello all!  Not only do we have a newborn at home that is gassy and doesn’t sleep well, but our 4-year-old has been out with a fever for the past week.  Just in time to have the end of our semester and grades and comments due!

Luckily, I was appraoched by a woman named Catherine Burke, who wanted to write a guest post for the blog.  I thankfully accepted, given how busy life has been at the moment.  I hope you enjoy this post about common five mistakes that people make and feel free to leave a comment if you do!

We all work towards making our financial future better. After all, who wouldn’t want to become a millionaire? Even if you can’t be a millionaire, you can at least plan a good financial future for you.

However, while doing so, I have seen many people committing mistakes unknowingly.

Are you sure you’re not making these 5 mistakes that are preventing you from being wealthy?

Check them out:

Not creating an adequate emergency fund

Yes, this is one of the greatest mistakes many people commit. Even if you’re saving a decent amount every month and following your budget, you need to have an emergency fund. This can help you avoid falling into debt if there’s an emergency.

Just having your emergency fund is not enough. You need to have about 3 to 6 months of your monthly expenses in that fund.

And, most importantly, use that fund only for emergencies like a medical emergency, a sudden car repair, and so on. And once you use the fund, try to replenish it as soon as possible.

If you can’t deposit a lump sum amount every month into your emergency fund, try with small amounts say about 5% of your paycheck. Gradually, increase it so that you have a good emergency fund.

Not modifying your budget from time to time

It requires no mention that you need to plan a realistic budget so that you can follow it effortlessly to save a significant amount every month. You won’t be able to trace where your money is going if you don’t have a budget and assess it.

However, even if you’ve planned a realistic budget and follow it, it’s quite important to assess and modify it from time to time. You need to adjust your budget as per your changing requirements. For example, your budget can’t be the same when you welcome a new member of your family. Likewise, you also need to modify your budget both when you face a job loss or there’s a salary raise.

Make it a family affair to plan a budget. Take into consideration each of the member’s requirements so that everyone’s need is fulfilled.

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Ignoring your credit score

Your credit score is not just a number. It can decide your lifestyle. If your credit score is good and your credit report is blemish-free, it can help you take out a loan at low-interest rate and thus help you to save significant dollars over the life of the loan. A low score may prevent you from taking out a loan altogether.

So, keep a close check on your credit report and score. Monitor your credit reports from time to time and dispute errors, if any. Check your credit score too.

Use credit cards and repay your bills at every billing cycle. If you don’t pay the entire balance monthly, it can hit your score and you’ll have to pay the interest too.

Not having required insurance coverage

You might feel that it’s a waste of money, but insurance coverage can actually help you save money. You never know, when a disaster can be detrimental to your finances. For example, suppose you wreck a car or there’s a medical emergency. In such situations, insurance can become a savior.  You won’t have to bear the entire cost yourself. The insurance company will pay most of the cost if that’s covered in your policy.

It is advisable to have health insurance, home insurance, car insurance, along with life insurance if you have dependents. Also, you should have the required insurance coverage. It won’t help you much if you’re not adequately covered.

Review your insurance policies at least once a year and drop coverage or go for add ons as per your requirement. Doing so, you can stay stress-free, which in turn, can help you stay healthy.

Not using your full potential to earn

If you’re satisfied with what you’re earning, you’re not using your full potential. Most of us are happy and comfortable if our basic needs are taken care of. However, you need to have that hunger to be wealthy. You will have to strive for attaining financial freedom so that you can enjoy your life the way you want. You won’t have to depend on your earning to meet your daily needs. And say, you can go trekking anytime you want, or do something that gives you the ultimate pleasure.

So, what can you do? You shouldn’t depend only on your primary income. Utilize your leisure time to earn more. Try to have multiple streams of income.

You can achieve that by creating a good investment portfolio. Along with that, look for part-time earning opportunities. Depending on your interest, you can give online tuition, be a blogger, and so on.

Also, do not hesitate to ask for help when you need it. When you’re not being able to manage your finances on your own, you can seek professional help. You can also consult with an experienced person like your parents or relatives.

Try to find out a solution as soon as possible before it becomes more difficult to manage.

It is normal to face hurdles on your journey of being wealthy. But, it depends on how you manage it; if you can do it well, you’ll emerge as a winner.

So, gather knowledge, become a pro in financial management, and be wealthy.

All the best!

Author’s Bio: This article is written by Catherine k. Burke and she loves to write about the financial problems of life. She motivates people to face the difficult situation positively with her writings.