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Money mistake #1: Spending too much
It is said that great fortunes are lost one dollar at a time. Going out to dinner every evening or shopping for clothes every weekend may not seem like things that make big holes in your budget. But every activity or item you spend money on counts in the greater scheme of things.
The money you spend on lattes and cappuccinos, cigarettes and other perks you could live without could go toward mortgage or car payments. When it comes to finances, every dollar counts! Think about it and act accordingly!
Money mistake #2: Borrowing money for daily essentials
For many people, buying essential things with credit cards is quite common. As appealing as it may seem, the interest rates such consumers are willing to pay for things such as gasoline, groceries and other perishable items are incredibly high.
They end up paying double for mundane items and eventually spend more than they earn. Don’t make the same mistake they do!
Money mistake #3: Purchasing a new car
Few people can afford to pay for their new cars in cash. But this does not stop millions of cars from being bought every year. How? Enter loans.
This wouldn’t necessarily be a problem if people understood the difference between being able to afford the payment and being able to afford the car. Most of the times people buy big, fancy cars that are expensive in terms of insurance, fuel and related costs. Why not stick to a car that suits your needs and budget and use that money to pay off other debts?
Money mistake #4: Buying an expensive house
When it comes to houses, almost everyone wants a bigger space. But bigger is not necessarily better. That’s because a 6,000-square-foot home, for example, comes along with higher taxes, utilities, maintenance and other hidden costs.
Buying a house at the top of your budget or even beyond ties all your money to a non-liquid asset that puts you at risk of owing more than the house is really worth. So, don’t be in such a rush to move to a bigger house, unless you have a large family and actually need to make this change.
Money mistake #5: Living paycheck to paycheck
According to Federal Reserve, the personal savings rate is 3.1%. This means that 4 to 10 American consumers are living paycheck to paycheck and an unexpected car’s repair or bill for medical services can turn into a financial disaster.
Financial specialists recommend saving three months’ worth of expenses into an account and use it as a buffer for emergencies. Having such a “slush fund” will prevent you from exceeding your checking account and going into overdraft.
Money mistake #6: Not saving for retirement
Do you want to work forever? If not, then start putting your money to work. Either by investing in the markets or making monthly contributions to a retirement account, make use of every dollar you’re earning now to be able support yourself later in life.
You can consult a financial advisor to choose the best retirement savings program for you and allocate your retirement money the best way possible. You can retire a millionaire if you follow these saving tips!
Money mistake #7: Not having a financial plan
Successful businessmen can confirm that without setting your goals straight and making a plan to achieve them, you’re really not getting ahead.
If you have enough time to watch TV or check the social media fees, then surely you can find a couple of hours to make a plan and secure your financial future! Such a plan will allow you to be more efficient in terms of paying off debts, making smart investments or saving money for retirement.
So, decide where you want to be in life a few years from now and use your money wisely to get there.