Making mistakes with our money is something we all are wary of but can never really be sure of avoiding. Even those of our friends who seem to have the smarts for handling their money, sometimes falter at problems that credit and financial planning bring along. Never was money as simple as saving in a bank account, if you wanted to make the most out of it. Ranging from making investments in real estate, shares and new start ups to managing loans, credit debt and risk, one needs to balance it all.
Most financial planners would come to common conclusions regarding the financial mistakes that regular people make, normally, and would advise strictly not to fall for them.
Letís talk about a few money mistakes that hover around most of us, some time or the other, in life.
Choosing a college without proper planning
When itís time for your children to pursue higher education, you wish to give them the best. After all, that decision shapes their future. However, wishing the best for them does not justify financial decisions that are not well thought over.
For example, while listing down the options for graduate school applications, one has to be completely aware of the fee structure and expenses that the degree brings along. Comparing the Return on Investment to this value assists you to judge whether your money is bringing you the returns you expected. A thorough research on the school policy, scholarship and financial aid options are a must. Plunging into an unknown sea of expenses could get as dangerous as it sounds, especially in case your child is making applications to graduate schools abroad. Living expenses vary from city to city.
Many a times, popular schools are located in metro cities that cost the student a lot in terms of cost of living, in which case, students either turn towards student loans or working part time. Student loans could also be tricky to understand. That is especially true for graduate schools that assure you of very high salaries. A student who loans the amount of, say, Rs 100,000 and is liable to pay an interest of 6.8% on the principal, could end up paying about Rs 1,100 every month for ten years to clear the dues for that loan.
So, unless one is completely aware and ready to take risks like that, they must weigh the options carefully. Similar situations apply when we