Everyone has their own shortcomings when it comes to money. For instance, in your twenties, its all about paying the college debt off. Or in your 40’s you’re a lot closer to retirement and trying to save for it. Either way, we all have our own problems to deal with.
Saving becomes tough and spending seems easier than ever. Whether you’re doing it for the first time or have a ton of experience with it, we still end up in the same boat.
But the one thing that’s strikingly common among all age groups is: Money.
It’s not because we don’t know how to manage money, we just let it slip from our fingers due to the various misconceptions we have towards them.
Penny pinching habits and living in a strict budget isn’t always fun, but it’s a lot more fun rather than swimming around shark loans or being stressed about money.
In that spirit, here are a few mistakes to avoid to help set your money goals right.
Spending more than you make
This is one of the most common mistakes we make. We tend to feel deprived of a certain commodity and find ourselves spending a lot more than we can afford.
Spending beyond your means isn’t going to sustain for long, especially when those bills start piling up. So, as much as you can, live within your means until you have the right security net to move past it.
Building a plastic empire
Credit cards are the easiest and most convenient way to burning a hole in our pockets. But beware, they also know how to burn it out of your savings. These plastic cards have the ability to run you up to a huge debt in a really short period of time. Instead, stick to a budget to avoid falling into the credit card habit.
No budget plans
Failing to budget is one if the biggest mistakes that we make. Having no or zero control of your finances can make it difficult on you and your financial goals. Budgeting right will not only help you save better but also manage income in a more efficient manner.
This is one thing I’m dead against. However tight the situation may be, avoid borrowing money from friends or family. Borrowing can strain relationship and it can get very personal. This may lead to them questioning your financial abilities putting you in an unnecessary spot. Also, avoid loaning anyone money either. It goes the same for them.
No emergency funds
An emergency can strike at any time. They can either be minuscule or mammoth-sized. Be it losing a job or an unexpected car bill.
Whatever it may be, these unforeseen circumstances can lead you into a crippling debt. While you don’t want to panic, having a couple hundred bucks in your savings account can take you a long way from stress-filled situations.
Not building good credit
It takes time to build a sustainable creditworthy score and practices to make your payments on time. Building a good credit history is your key to renting your first apartment or even getting a loan. Excessive credit utilization may result in a decrease in credit worth.
Not having a firm financial goal
Establishing financial stability doesn’t occur overnight and takes effort. You need to give yourself enough time to get there. Set a couple of parameters to help achieve your goal.
Whether you’re buying a new house or paying off a debt, analyze each situation by taking a realistic look at making it all come true.
Financial pile up can take a toll on your money goals. Try staying on top of your finances by being aware of important information. Make time to be organized and actively manage your finances to avoid unnecessary interest charges.
Identifying these very underlying mistakes can help us a long way to setting the right financial goal in our lives and protecting us from being in severe debt.