In this piece, I aim to tackle some of the biggest financial mistakes out there. Everyone makes them, and they aren’t even aware of it! Take a look at them here:
Maxing Out Your Credit Card
Another highly common financial mistake is maxing out your credit card. Some people might not know what it means when a credit card has been maxed out. If this is the case, then you’re doing things right! If you’ve ever maxed out your credit card, then you’ll know about it. The card company will contact you and tell you that it has happened. Maxing out your card refers to when you hit your spending limit. Everyone with a credit card is giving a certain limit that they can spend each month. Every financial expert will tell you it is unwise to hit that limit.
When you max out your credit card, it just gives you more money to pay off. The problem is, a lot of people have a max limit that’s slightly out of their reach. When this happens, it can be difficult to pay your credit card bill in full every month. Funnily enough, that’s another mistake people make. They only pay the minimum fee, and then the rest starts gaining interest. Maxing out your credit card is one of the major causes of debt for modern people. Especially young people, who have just applied for their first credit card. When one type of debt arises, it usually leads to other debts. Before you know it, you’re spiraling out of control. This is why there are so many debt relief companies popping up nowadays. Companies like National Debt Relief, run by CEO Alex Kleyner, see many cases every year. Often, credit card debt is the source of everyone’s debt problems. So, avoid it, and your life will be a lot easier.
Not Setting An Emergency Budget
Putting some money away in an emergency fund is very common nowadays. In fact, it’s one of the best financial tips anyone will give you. Saving money is essential if you want to plan for a prosperous future. By having emergency funds, you’ve got a safety net in place. If something suddenly happens and requires money, then you’re sorted. You won’t have to rely on your regular income to pay for everything during the emergency. As such, your finances won’t receive such a massive hit. Without emergency funds, you can get into a bit of a pickle. You may not have enough money in your account to pay for the costs of the emergency. Consequently, you could end up being forced to apply for a loan. As a result of that, you could end up in debt.
Now, emergency funds are great, but, there’s one big mistake everyone makes. They save their money and don’t make a plan for it. No one seems to make an emergency budget to go alongside their funds. A budget like this will help you figure out how to use your emergency money. It ensures you get the most out of all the money you saved up. So, a lot of people think they’re doing things right by saving some emergency funds. But, without an emergency budget, you’re not following the advice fully.
Not Investing Their Money
One of the best things you can do with your money is to invest it. Everyone should build up a small fortune of wealth over time. You earn money from your job, and you can save some too. Over the years, your savings build and you have a decent amount of money in the bank. But, it just sits there in a savings account, not doing anything. Sure, you get some savings accounts that have decent saving rates. So, after a decade or so, your money will have increased somewhat. However, the best idea is to invest some of your life savings. Investing gives you a chance to turn a small sum of money into a bigger sum of money. What’s more, this can be done in a short/long space of time, depending on your wants and needs.
Investing is easy if you know what you’re doing. My advice is to speak to a financial advisor at your local bank. They can take a look at your financial position, and advise you on the right investments to make. Another benefit of this is that you tie money up in different assets. So, let’s say the worst thing happens and you pass away. With your investments, you’ve given your children some assets that they can inherit. It sets your children up for a good financial future after you’ve passed away. I know, it’s not something you want to think about. But, it’s something you should have in mind. The only way investments are bad is when they go wrong. Wrong investments include spending loads of money on things you don’t know a lot about. I’d never invest in anything unless your advisor says it’s a good idea.
Spending Too Much On Housing
Everyone needs to purchase a property at some point in their lives. You can’t live with your parents forever, and renting is never a long-term solution. So, off you trot to look at the housing market and see what you can buy. This is where one of the biggest financial mistakes takes place. People will overspend on housing, by quite some distance.
There are many reasons they do this, often, it’s because they buy at a bad time. Buying at a bad time can mean you spend way more for a house than you need to. When house prices are high, you can get ripped off. The problem is, buying a house is the biggest purchase you make. Spend too much, and your finances can take a hit. You’ll need a huge mortgage, and spend decades of your life in debt as you pay it back.
So, do you make any of these four mistakes? If you do, then you need to stop, now! If not, then I hope you can avoid them after reading this article.