Many people struggle with money because they lack systemic financial know‑how. Errors tend to be rooted in everyday habits rather than isolated incidents. Economist Svetlana Pavelchuk spoke with socialbites.ca about clear signals that a person could benefit from brushing up on money management.
The first sign is failing to live within one’s means.
“Taking on loans with interest without recognizing the total repayment can trap you in a cycle of debt. A healthy approach is to map finances as soon as income arrives: plan expenses in advance and set aside at least 10 percent for savings. In time, smart saving becomes the seed for prudent investing. Also, when evaluating any new loan, consider four key criteria: urgency, repayment terms, monthly payments, and collateral. This helps prevent emotional or situational purchases,” he noted.
The economist also drew attention to the absence of a financial safety cushion.
“Without savings, life can feel unpredictable and one misstep may lead to real trouble. Build a reserve that can cover several scenarios—child education, a vehicle purchase, or housing. A safety net equal to at least two months of income can be a practical shield in emergencies. In tough times, such reserves have helped many families weather shocks, including the pandemic,” he added.
The third sign involves excessive or unfair saving that misses the balance between income and needs.
“The old saying applies: a miser pays twice. Cheap items can break quickly and trigger unplanned spending. Regularly tracking income and expenses helps create a clear picture. Whether you use a notebook, a notes app, a spreadsheet, or a simple budgeting tool, the habit pays off. With disciplined money management, responsible purchases move from dream to reality—paid from savings, not credit,” the expert explained.
According to Pavelchuk, it’s not wise to invest every penny in a single business venture.
“Many young entrepreneurs reinvest almost everything into their venture. That approach can be risky, especially without a safety net, and may lead to significant losses. Early on, it makes sense to pursue low‑risk, modest strategies and build experience. Personal time and effort can yield better results than a heavy upfront investment that often goes wasted,” he added.
Another common mistake is letting profits vanish without building reserves for development and future opportunities.
“Spending all earnings right away or chasing big, immediate gains isn’t sustainable. A portion should be kept aside for growth and a predictable ‘rainy day’ fund for the business and its people. The same principle applies to individuals who spend today and travel tomorrow with nothing left. A clear margin rule helps; for example, reserve 10 percent of the profit for future needs,” he explained.
Yet the most fundamental misstep is missing goals—without a target, money management loses direction.
“A person without concrete goals struggles to manage money. Create a real plan that outlines what money is for and when it’s needed. Clear goals reveal how much is required and when. A defined purpose also protects budgets from tempting distractions. When the why is obvious, it’s easier to resist manipulative advertising,” the economist said.
The conversation hints at practical, approachable ways to improve financial health for both households and small businesses in North America.
In summary, building foundational habits—spending within means, maintaining savings for emergencies, balancing saving with sensible spending, diversifying risk in investments, and setting clear goals—can empower individuals to reach their financial milestones with confidence, even in uncertain times. These practices are applicable to a wide audience across Canada and the United States, offering a pragmatic path to steadier personal and entrepreneurial finances. — Attribution: Pavelchuk, as cited in socialbites.ca.