Everyone can make mistakes, but some are more costly than others. Finding yourself making a mistake when it comes to your finances is avoidable with some coaching and a bit of awareness. Here are five top common money mistakes that you can avoid.
“If you don’t have it, you can’t spend it!” – anon.
1. Poor use of credit
Credit cards are appealing. Whether it’s air miles or rewards, credit cards seem like a product that you can or should make the most of. The truth is that people find themselves spending money that they don’t have, and very few people understand how they work. Lenders often have conditions that force their users to pay high fees for their borrowed money, particularly if they are late to repay their credit. Sometimes as high as 16.4% interest on your credit. Many credit cards date interest back to the date of purchase if it’s not completely paid off in time, while many people believe it’s dated back to the end of the month. Excess credit card spend and a poor understanding of how they work is a common financial challenge for many people. Unless you are diligent with ensuring that you are on top of your repayments, reconsidering the role of credit cards in your financial life.
2. Car loans
Acquiring a loan for an expensive car is a commitment that people are not always ready to take on or support. Not only will you have to pay your monthly repayments, but fuel and service costs are often left out of the picture when we consider getting a car loan. It can be difficult to wrap your head around the ongoing cost of running a car that may be slightly out of your price range. It is hard to predict what your finances may look like in the near future and committing to an extra cost, such as a car loan, can put pressure on your future self.
3. Not budgeting
So many of us live paycheque to paycheque without considering how introducing a little bit of budgeting to our lives may help us save up for the future. There are plenty of budgeting apps that can help us do this and a little bit of research on the topic can help you become a better saver sooner.
4. Money is not Taboo
Money is something that we will all deal with at some point or another. Whilst sometimes it may be inappropriate to divulge your financial information, it can perhaps be one of the most important steps in demystifying your money flaws and helping you move forward. By no means should you go out and let everyone know how much money you make, but maybe have a conversation with some of your nearest and dearest about what exactly concerns you about money, particularly your accountant or significant other.
5. Plan to reduce your debt
Having a plan to reduce and eliminate your debt is well worth the effort. Many people find that they struggle with debt for several years without being able to find a way out and let’s face it, it can be soul-crushing. With a little bit of planning, you will be able to dig your way out of debt and work towards some of your goals that you might not have been able to visualise.
If you would like some more information or would like to address some of your money mistakes, contact us today through our website.