Financially responsible people are making money mistakes they shouldn’t be making in their spending. Whether you have a significant income or live penny to penny, you should be exercising good money management skills daily. To do this, you must acknowledge the mistakes you are creating and stop producing them.
Before you fix your money mistakes, you shouldn’t beat yourself up but instead, focus on averting them in the future. Here are eight money blunders people frequently make and how to prevent them.
No Savings
Every financial consultant will recommend you not only have a savings account but more than one, yet many working and financially responsible adults do not have anything saved. The claim by those who do not have a savings account is generally that they can’t afford to save anything.
Understandably, you may not think you can afford to save, but if you were to analyze your budget, you could probably find a few things you could cut back on to put into your savings account. Most people are in denial about their ability to save, and they need to be more disciplined in their budget efforts.
Not Focusing on Interest
First, many of those obtaining credit cards or loans that carry interest don’t pay attention to the percentage of the interest they are agreeing to at the time of the loan or signing the credit card agreement.
If you have no choice but to agree to a higher interest rate, such as with a car loan, you need to make that account a pay-off priority and always pay more than the minimum payment. Early pay-offs of any accounts carrying interest or high interest will minimize the cost and debt damage that interest can do to your finances.
Impulse Buys
When it comes to spending, people are sometimes impulsive. While making impulse purchases on occasion will not do any significant damage to your overall finances, if you are regularly impulsive when it comes to spending, you must get it under control.
From shopping at the store to passing a sale or seeing an ad on tv, you have to resist making unplanned purchases as much as possible. This resistance can be how you prevent unnecessary debt throughout your financially responsible life.
Undue Overconfidence
While you can and should invest in the stock market, you must be careful and not get overconfident. The stock market can be a risk that will often have a high reward. However, you have to be thoughtful in your investments and use caution rather than arrogance.
Sometimes we will make a great trade and make a lot of money which builds our confidence, and if we get too confident, it can cause us to make critical mistakes and lose more than we can handle.
Paying Full Price
While brand loyalty and trust are understandable, paying retail when there are ways to save and still have quality products is a waste of money. There are outlet and discount options that will allow you to have your name brand still while saving money. Generally, generic products are equal to the name brand in quality at a fraction of the price simply because it doesn’t have the name attached.
Not Focusing on Credit
Most people already realize that your credit score plays a significant role in your financial health. Even if you don’t plan to make large purchases using a lender that requires your credit score to be high, having a low credit score can cost you. Many companies such as insurance, cell phone, and utilities use your credit score to determine fees and deposits or down payments.
There are even some jobs that will reject you for hire if you have a low credit score. With so many sites or apps that offer free credit reports, there is no reason you shouldn’t know what your score is and what the issues are. Repair your credit and do it now!
Ignoring Bill Savings
Most people don’t realize that many of your bills and services can be negotiated. Utilities, phone or internet services, and medical bills are a few that you can sometimes negotiate to a lower amount. Even if the answer is no, you should make an effort to negotiate your bills and payments to a lower amount or refinance if your credit is in a better position.
Not Saving Tax Refunds
Many Americans get a little to thousands of dollars back on their taxes each year, and while it is good for the economy to spend that refund, you should save some of it or invest it so it will grow into more revenue. It would be for the best that you save or invest it all, but one financial treat is acceptable.
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