Common Mistakes that Could Ruin your Finances

Common Mistakes that Could Ruin your Finances

Managing your personal finances is easier said than done. Some of these common money mistakes are actually made all the time, and if you’re not careful, you may find that they go on to impact you for longer than you’d like in the future.

Not Understanding your Insurance Needs

Insurance is super important, and there’s a good reason why you need it as well. Health insurance, car insurance, life insurance and more are all very important. You need to make sure that you value the savings you are getting and then weigh them up against the insurance policies that are available. If you aren’t careful with this, then you may find that you end up paying way more for your insurance than you should be and this is the last thing you need.

Not Saving Enough

Not saving enough is another huge money mistake that so many people make every single year. You should always try and strive to spend less than you earn because if you do then you may find that you are able to save and this can help you to secure your financial future. If you want to try and help yourself to make the most out of your savings, then it would be helpful to start your own savings account. When you do, you can then put away a good amount each month without having to worry about a thing. Of course, if you are finding it hard to save, then you should know that there are many things that you can do to help, such as by cutting back on your groceries or even by trying to find a credit card that has lower interest rates.

Not Paying your Mortgage

You have to make sure that you always put in the effort to pay your mortgage on time. Sure, something may come up which may mean that you no longer have the money for that month, but this is why it’s so vital that you have an emergency fund. If you don’t, then you may find that you struggle to save in the future. If you don’t have the funds to pay your mortgage then this is understandable, so at least think about taking out a fixed rate. When you do, you will soon find that you are able to take out a much better deal and that you are able to save a good amount of money as well.

Ignoring your Partner’s Poor Behaviour

If you have a partner, then you may feel the need to try and guess what is going on with their financial behaviours, so that you can figure out how they affect you. It doesn’t matter whether you have finances which are joint or whether they are separate because you have to make sure that you are on the same page as much as possible. If you know that your partner is in debt then you need to try and find out why, and you also need to make sure that you are not allowing their reckless behaviour to affect your own payments, so keep that in mind. If you feel as though your partner is not being open about their money and their financial situation, then it’s worth trying to make sure that you have separate accounts so that you don’t need to worry about them impacting your credit score. If you are concerned about losing your house because of your partner’s spending habits then learn more about how to stop foreclosure here.

Having Credit Card Debt

Carrying a balance on your credit card is another mistake that so many people make. You don’t want to carry debt if you can help it. If you know that you have a balance on your credit card then this means that you are buying more than you are saving and this can really go on to affect you later in life. Sure, credit cards are easy to spend on, but at the end of the day, they can also be dangerous. If you do not have the money to pay down your credit card on a regular basis then this will go against you and you may even find that you end up not being able to afford your regular expenses as a result. If you have multiple credit cards, then you may want to try and make sure that you are using the ones which have the lowest interest rate. If you don’t have the limit then paying down your cards is key. One way for you to do this would be for you to try and use the snowball method. The snowball method is great because you will essentially pay off your smallest debt, and then the money that would normally go towards that, goes towards your next debt. Little things like this can make a drastic difference to your finances if you are able to stick to the rules you have set for yourself.

Lending Others Money

Lending other people money or even co-signing them a loan is not usually a good idea. You really don’t want to be stuck in the middle and lose out on money, so it’s best to make sure that you are not letting money get between you and the relationships you have. If someone asks you for money then of course, you may feel obligated to say yes, and if this is the case then you just have to make sure that you are not lending out more than you can afford. Ideally, you should always be prepared for the chance of not getting the money back. After all, the other person may fall on hard times or it may be that they have lost their job and no longer have a source of income. Either way, you should never lend out more than you can afford for this very reason, so you have to make sure that you are doing everything you can to try and avoid lending money if possible.

Not Having a Budget

It doesn’t matter how much money you make because you need to have a budget. If you make $100,000 every single year but end up spending $95,000 of it then you won’t be any better at finances when compared to someone who makes $20,000 but spends $15,000. A budget can help you to control your spending and it can also help you to make improvements where required. A budget can help you to think about money a little bit more and it can also help you to meet your own financial goals.

Not Caring about What you Say In Public

You are probably wondering why on earth this a common money mistake, but it is. If you over-share on social media, then you may find that you end up not getting the job you want after all and this can work against you in the long run. If you want to help yourself to get the best result out of the jobs you apply for, or if you know that you are seeking a promotion at work then it is best to make sure that you are mindful of what you post. One outspoken statement could easily be your downfall, and this is the last thing that you need. If you want to stop this, then one solution would be for you to put your profile on private. When you do, you will be able to limit what everyone can see, to your friends only.

Not Having a Good Plan

You may think that you don’t need a plan in life, but most people need to have some kind of plan. You need to think about all of the goals you have in life and you need to actively work towards them. It’s very important for you to have a good retirement plan too. Think about it, do you plan on retiring early? Do you ideally want to pay off some of your debt this year? How about going on holiday? You need to try and make sure that you have a plan to achieve all of this because if you don’t, then you may find that you end up struggling in the future.

Not Paying Attention to your Credit Score

Even if you’d rather think that your credit score is not important at all, there are many cases in which a good credit score is better than a bad one. A good credit score will mean that you end up getting a much better interest rate and this could mean that you end up saving a small fortune on your interest charges. If you get a good credit rating then you may find that you are able to qualify for a better mortgage too, which can work wonders for you in the long run.

Of course, there are so many things that you can do to try and make sure that you are going to get the best result out of every dollar you spend. If you follow this guide, then you will soon find that you are able to just save money, but also safeguard your future.

 



Author: The FINANCIAL