Five Delusional Financial Strategies

Saving money should be a priority for everyone, but particularly for anyone who wants to live a comfortable retirement, send their children to college or own a home. The problem is not that most people lack the desire to save, it is that they are not approaching it correctly.


Too often people fool themselves into believing that the money they need will just appear in their accounts, or methods they have been using unsuccessfully will suddenly begin working. Here are five delusional financial strategies that people are using to keep themselves poor.


#1- Believing in Financial Karma


There is nothing wrong with doing what is right, but when people do for others, hoping those others will return the favor, they are often disappointed. Allowing a co-worker to take full credit for work they have done, loaning money to people who will never repay it and giving away to charity more than they can afford are all examples of these missteps, Yes, these things may make a person feel good, but they can lead to financial losses, or the potential loss of a well-deserved promotion.


#2 – Spending Money Foolishly


Lottery tickets are not an investment. The government is the only one making huge profits from these games. The odds of winning anything substantial are very small, and even when a win occurs, it rarely pays back the player what they have spent over time. Another big money-waster is paying with plastic. Credit cards are a dangerous gamble as well and should never be used. Even emergencies can be paid for with cash, if people are saving correctly. Unfortunately, it is too easy for people to promise themselves they will pay off the bill in full the following month. The excessive amount of consumer credit card debt that now exists proves how rarely that promise is kept.


#3 – Expecting Income Growth


Basing a budget on expected raises and promotions is a dangerous risk. Every productive employee will see their income grow some, but that does not mean it will always do so. Companies go out of business leaving the employees to start over somewhere else and inflation often increases at a rate that exceeds standard raises. Additionally, everyone will eventually reach the pinnacle of what their experience, education and abilities makes it possible for them to earn.


#4 – Working From Home


By eliminating all work-related expenses, like a work wardrobe and commuting costs, people will save a fortune, right? Wrong. Choosing to work at home means taking on the responsibility for paying all taxes and expenses, and investing in all of the equipment that was once free at the office. Paper, pens and office equipment add up quickly, and tax breaks are not as easy to find as it may seem. In addition, family, friends and pets are all the new adversaries to efficiency, making it hard to even find the time and quiet space needed to work. Add in the fact that holiday pay, annual bonus checks and vacation pay are all a thing of the past, and it is easy to see how much is lost when choosing to stay at home.


#5 – Over-spending on Education


A degree is a necessity in a competitive work environment, but college debt is destroying the financial dreams of many. It is important to choose what career is the most desirous and then work to attain the minimum amount of degree to get this type of work. Returning to school for an advanced degree should only be considered if there is a clear plan to make it worthwhile. To do so just with the hope that it will pay off later on is how many graduates have ended up living with their parents again.


Saving money is possible, but it will not happen quickly and money will not appear magically. It takes a sensible plan to make it possible. Only by avoiding common pitfalls, breaking bad habits and being honest about potential lifetime earnings can anyone realistically reach their goals.