Your Neighbors are not Thinking Long-term: the Financial Pitfall You Should Avoid

We all pine for a higher standard of living. No matter how hard we try, we cannot help but compare our lifestyle to our neighbors’. Living in the same locality, enjoying a similar pay scale, we cannot help but wonder how they can live such a life of luxury that we can only dream of.

Don’t worry; it’s basic human nature to strive for better prospects.

You may, as a result, curse your budget calculations and your financial advisor and go on a shopping frenzy. You may commit yourself to extravagant expenses to get on a similar living scale as your neighbors’. But, what are the chances of you pausing and wondering that your financial advisor might not be wrong at all? Whatever they are suggesting has been learned from years of experience.

Here is a list of things that your neighbor might be doing wrong, that will eventually welcome tragedy, the very same mistakes that we should avoid at all costs.

1. Mayday Mayday!

Your neighbor might not be saving for the rainy days. One can never ascertain disease or accident that may require you to draw on your savings. But, if you do not save for unanticipated expenditures, you may have to get yourself into high-interest loans or a financial crisis.

2. Splurging your income without saving for retirement

Many of your acquaintances will remind you to live in the present. Sure, you should make an extra effort to make your present beautiful. However, at the same time, you should not turn blind to the impending old age that would pass relying on retirement savings. Thus, it is crucial that you save a proportion of your monthly income for retirement. The earlier you start to top your retirement savings account, the higher returns you gain upon our retirement capital.

3. Living on credit

One of the greatest blunders you might commit is falling captive to the ruse of credit cards. It does not sound a big deal to pay through a piece of plastic because you might automatically assume that it is a deferred payment, an amount you can easily pay off with your next fat salary cheque. People often forget about the hefty interest charged on every credit drawing so, the thing you purchase with your credit card often ends up being far heavier on your wallet.

4. Making impulsive purchases

No matter how rigid your budget may be, your heart will always try to sway you. It often quips, “All you are earning is for us, and I want the money today. Look at that beautiful red handbag! How can we do without it?”- that is where your brain stops functioning, and you brandish your credit card with extreme finesse and slide it at the POS. Cut to you reaching your home and realizing that you do not even have an outfit to pair with the new handbag.

Financial advisors suggest that if there is something that gravitates you during your window-shopping stroll, you should walk out of that specific shop immediately and engage yourself with other activities. If that thing still pulls you to it after half an hour, then go for it. The higher chances are that you might not want to go back, and your heart will be back inside the budgeting cage.

The Bottom Line

You must remember it is not incumbent to compete with your neighbor. At the end of the day, your satisfaction with your lifestyle must come from your heart. Making foolish financial decisions may only provide momentary gratification but a stressful financial fiasco. Thus, it’s better that you pay heed to your financial advisor and improve your life in real terms.