Dealing with your personal finances can be stressful for many people. Whether you’re saving up to buy a house and looking to cut back wherever possible or seeking a loan to cover certain expenses, there are many places people go wrong. Making a financial mistake can literally be costly, so to try to prevent this from happening, we’ve compiled five of the top financial taboos and solutions.
- Lack of Planning
Your financial future is affected by what is happening now. Not having a decent plan in place that details how you are going to meet any savings goals is a big error, as you may struggle to meet any unexpected payments in the future. Financial planning services such as Tilney can help you create a thorough strategy for getting into a strong financial position, so you can afford everything you need in the future.
- Being Over Insured
Insurance is an essential cost throughout your life and being under insured is incredibly risky and can completely backfire. Yet being over insured is also a mistake. Paying for more cover than you require, whether on a monthly or annual basis, is simply a waste of money. Check what insurance you currently have, see if your work provides any cover that could mean your personal insurance isn’t as necessary to avoid overpaying.
- Applying for the Wrong Products
For anyone in debt or needing to borrow money to make an essential purchase, there’s a plethora of financial products out there. Problems start when people apply for too many or the wrong ones. Applying for too many at once to compare rates will see your credit score deteriorate and make borrowing harder. Instead, use comparison sites and leave gaps between applications.
- Not Investing
When you’ve got spare money, use it. Many people just have their pay checks go into one bank account and come out when they make purchases. You need to save money somewhere and get your money working, from an ISA or other account with better interest rates, to trading on the stock market, investing in property or elsewhere.
- Misusing Home Equity
Refinancing on your home and taking cash out means giving away ownership to someone else. While it can be useful if you are desperate, you should be aiming to build equity, not take it away, since you could end up paying more for your home than it’s worth. If you need some extra cash, you could look at other solutions first, such as loans, credit cards or even asking a family member.
Avoid these common financial pitfalls and everything should run much smoother.