During my course of work and my day to day interactions with friends, I find myself noticing recurring themes in money issues that makes me ponder. Today, I'm going to list 3 of the common ones which we should all do our best to avoid.

1. Not paying your credit card bills on time and in full

I've noticed that some people try to stretch their spending capacity by living on credit. By saying this, I mean they pay stuff through their credit cards and they pay the minimum on their cards and the interest charged for the balance. Overtime the amount snowballs and sometimes they end up paying off credit card debts. It's a lot of money wasted on interest paid if you think about it. Credit card interests is one of the highest and if paying off credit card bills in full is not for you, you should not have a credit card.

Having said that, credit card ownership is not a bad thing. You earn points through rebates or miles to fly. The issue comes when you end up in a situation where you pay more because of overspending. While I've never had repayment issues, I've noticed a time when I was paying everything with a credit card and I'll overspend a couple of hundreds more than I really intended to spend. So for a period of time, I paid most of my expenditure in cash and minimized the use of my credit card. My purpose of sharing this is to make a point. If someone like me who I consider to be fairly prudent with my expenditure can overspend on a credit card, then if you know you have a weaker self control, you should really minimize your use of your card and spend mainly in cash. At the very least, even if you spend all your money, you will not be in debt or pay unnecessary interests to the bank.

2. Prioritizing your wants over your needs and overspending on them

Another common issue I've seen happening more and more is how people tend to prioritize their wants over their needs and if that's not enough, overspending on them. One ready example that I have would be in the form of cars. I've known people who have money for cars but no money for insurance. On top of which, they buy cars that puts a monthly strain on their incomes. In the wake of low COE pricing, car ownership is tempting however it should not be at the expense of your duty to be a responsible individual to yourself and your family. I classify insurance as a need if you do not have the ability to self insure. I also classify having 6 months of emergency funds in the event of unexpected unemployment as a necessity. Having said that, car is just one of the more recent examples that comes to mind. Other forms of extravagant spending in the wake of needs can come in the forms of holidays, luxury items, etc...

Again, I'm not advocating depriving yourself of luxuries and not spend money to pamper yourself at all. However, it's important to do so not at the expense of needs that can jeopardize your lifestyle if poopoo happens. Trust me, I can't wait to drive my dream BMW Z4 but I'm driving a much smaller car now and am in a worry free financial health. If you want a car but there's a constrain over what you can afford, you can always start with a smaller car or a second hand one first. The excess savings can be channeled to your needs. I mean, most of us expect to live up to 65 or longer (that's why we need retirement planning right?), so what's the hurry to experience all the luxury living in your 20s or 30s if your pocket has a limitation?

3. Not having financial goals

Have you ever asked yourself what's your saving goal, investment goal or income goal? Maybe even financial freedom goal? Most people have dream wants like 'oh it's nice to have 100K in the bank' or 'earn 10K a month in income' but it's merely a good to have for many people. Not many are actively seeking or working towards it. This is one of the reasons why very few people are interested in financial planning and why financial advisers exist to nudge people to do something with their money.

Recently, there's this news article in the TODAY paper that kept appearing on my Facebook feed. Most Singaporeans behind on retirement plans, many unsure how to grow wealth. This problem is mainly a result of not having financial goals. Financial goal setting entails not only having an idea of how much savings you want and by when, it also helps you to form a plan on how to get there. This is proven time and time again by once again the car example. There are people (from the not so educated to the highly educated) I know with money constraints who own their own vehicle. Obviously they saved up for it before they bought it. Even with a loan, unless you earn 20K to 30K a month, you definitely need to save up to downpay a car. This shows that if people have an intention on what to save up for, they can do it and you don't have to be smart to know how to do this. If this is the case, it's all about having financial goals and most people will develop the answers on the how along the way once they are serious enough about their goals.

In summary, these are the 3 prevalent money mistakes I've seen people make very often. I think most of us already know this. From time to time, we just need reminders.

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Disclaimer: The content created are based on my personal opinions and may not be representative to everyone or any organisation. If you have any doubts or queries pertaining to insurance or investment, please seek professional advice from a trusted adviser in an official setting. You may also reach out to me if you do not have a present adviser using the message box under 'Let's Talk'.