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Just writing a little thread about personal finance tips and mistakes to avoid.
These are very common sense tips but not sharing them with family has meant that people who should have known better unfortunately made these mistakes and got themselves into mountains of debt.
These are very common sense tips but not sharing them with family has meant that people who should have known better unfortunately made these mistakes and got themselves into mountains of debt.
1. Credit card debt is the worst type of debt and using credit cards frequently means we stop realising that we have to save money before buying something expensive. Credit cards encourage impulsive purchasing. So only use credit cards for emergencies.
2. Share your money situation with your family members: wife, kids, parents, etc.
I know you may not want to "stress them out" but sharing this information will help you with the discipline needed to become debt free. Your family will also understand why you're being "stingy."
I know you may not want to "stress them out" but sharing this information will help you with the discipline needed to become debt free. Your family will also understand why you're being "stingy."
3. Car loans, now it's always v attractive to finance a shiny new car but this is a trap.
If you had to buy the car outright with cash chances are you'd buy a much cheaper car. But with instalments you are likely to overspend and load up on unnecessary debt.
If you had to buy the car outright with cash chances are you'd buy a much cheaper car. But with instalments you are likely to overspend and load up on unnecessary debt.
And that excitement you felt when buying that brand new car goes away in a few months whilst the instalments stay for years.
4. Don't borrow money to "invest."
This is a problem you see less in Pakistan but I've seen too many people abroad take up loans to buy investment properties and hope that the rent will pay off the mortgage. Now this works for a few years but thing is mortgages last 10-30 years
This is a problem you see less in Pakistan but I've seen too many people abroad take up loans to buy investment properties and hope that the rent will pay off the mortgage. Now this works for a few years but thing is mortgages last 10-30 years
Now 10-30 years is a very long time and property values and rents will have ups and downs.
When rents climb up and their profit (rent - mortgage) goes up they just spend the extra money but when the market goes down all of a sudden they cant pay that mortgage anymore and so...
When rents climb up and their profit (rent - mortgage) goes up they just spend the extra money but when the market goes down all of a sudden they cant pay that mortgage anymore and so...
5. Don't start day trading just because you watched that Wall Street movie and think you can become a millionaire overnight.
If you have savings and want to invest in stocks there's nothing better than the S&P 500 index.
If you have savings and want to invest in stocks there's nothing better than the S&P 500 index.
Most professional hedge funds with much cleverer people than you and I get beaten by the S&P every year.
Oh and also don't invest your money with hedge funds. Because even IF they make a profit that's higher than the S&P rise, they will take a huge % from you as management fees
Oh and also don't invest your money with hedge funds. Because even IF they make a profit that's higher than the S&P rise, they will take a huge % from you as management fees
As a general (no pun intended) rule it's very risky to give other people your savings to "manage" because no one will be as cautious with your money as you will be.
Also as a general rule it doesn't mean that you cant have nice things or have nice experiences. There's nothing wrong with spending money whatsoever.
It's just important to get into the habit of saving for things you want to enjoy. Saving for a new phone, computer, holiday etc.
It's just important to get into the habit of saving for things you want to enjoy. Saving for a new phone, computer, holiday etc.
Someone in my family who for most of his life never had any debt all of a sudden is buried in credit card debt because he'd never had one before and then when he had it he just used it whenever he wanted something.
And this was the peak of his career and he was earning v well.
And this was the peak of his career and he was earning v well.
But still the poor spending habits facilitated by the credit card + the high interest rate of the credit card meant his income was outpaced by how fast his debt grew.
And banks continued to lend to him since he was earning well...
And banks continued to lend to him since he was earning well...
Also adding if you don’t know something don’t invest in it.
Like if you don’t know stocks don’t invest in stocks.
Also do remember it was specifically people who wanted to trade stocks but had 0 knowledge who were scammed in a pump and dump scam by @MirMAKOfficial
Like if you don’t know stocks don’t invest in stocks.
Also do remember it was specifically people who wanted to trade stocks but had 0 knowledge who were scammed in a pump and dump scam by @MirMAKOfficial
