How you spend your money, how much you save, what type of investments you make, and whether or not your choices are good or bad is important in all aspects of your life and will have an impact on your current lifestyle and your retirement years. Bad financial decisions can ruin your life and hurt those that you love.
We all aspire to make good choices in our pursuit of financial stability but sometimes we get lulled into a false sense of security when we start making money and getting credit. We start living on the fast track. We get greedy and before we know it, we are overwhelmed by bad debt, and a lot of bad debt is not good for your financial health.
You can be rich, middle class, or poor. It doesn't matter what income bracket you are in because we are all creatures of habit. The more we earn, the more we spend. Some people make a lot of money but can never ever become debt free. We get into financial trouble because we don't know how to manage our money and that is not good for our long term financial stability.
Another bad financial decision that many people make is that we get caught in a web of unnecessary borrowing. This is not to say that borrowing money is bad. On the contrary, we all need to borrow at some point in our lives. We take out loans to buy cars and trucks. We need to borrow to buy homes, farms, ranches, and other real estate. We get small business loans, loans to pay down debt, and we borrow for other reasons.
What gets many of us in trouble, though, is when we start borrowing just because we can. We know we can get the money and we jump on the opportunity. We borrow to keep up with the Joneses. We borrow for homes that we can't afford and we borrow and use high interest credit cards to buy fashionable, high priced clothes and jewelry. We take out loans to buy luxury cars and other high ticket items.
We get in the bad habit of refinancing and getting loans to pay off other loans instead of paying the loan amount off. We should only borrow for things that we really need and then pay the loan off as it it written before jumping into something else that requires us to refinance or to borrow more money. By constantly refinancing, you end up with bigger loan balances and higher payments. This is what has gotten a lot of people in trouble over the past few years.
Many of us have borrowed and spent beyond our ability to pay the money back. We have lost sight of the fact that money (cash) is a liquid asset that flows like water. Once the cash is in your hands, it doesn't take long to dry up and when it's gone, it's gone for good.
•Usually, when we first start borrowing money and taking out property loans, we do spend it on things that we actually need. It's after we learn how easy it is to borrow that we get in trouble with our credit and debt. Borrowing becomes a bad, uncontrollable, habit and a lot of people don't realize how much debt they are in until they end up in debt counseling or bankruptcy court.
In today's fast paced world, we live fast paced lifestyles and we don't don't know how to slow down. Everything is about getting things done right now and our spending habits can attest to that. We don't recognize the warning signs of an impending financial calamity before it's too late.
If you want to make the right financial decisions, you have to find the best ways to keep improving on your financial health by making your money grow. Making a lot of money does not guarantee that you will be financially secure in the future. It doesn't matter if you are rich or poor, if you want to prosper, you can by saving and investing wisely and controlling your spending habits.
Always keep in mind that, no matter how much money you make, the unexpected might happen to disrupt your income potential. Even if you are great at managing your money, a serious illness or accident may occur that might leave you unable to work or run your business.