Making mistakes on a financial level is natural and it happens even to the best of us – but those of you who cannot actually afford making such mistakes will definitely want to avoid them as much as possible. What are some of the most common money mistakes people make? Here are 5 of them:
1. Not saving money
Saving money for the rainy days can get you out of a lot of trouble – especially when it comes to those urgent, unforeseen situations when you really need some extra cash. Not saving money is a mistake that can end up costing you quite a lot and it is something you can actually avoid doing. Everyone can save at least some money and you can do it too. There are literally hundreds of ways to save money and you should try out those that fit you best.
2. Not creating a budget
It doesn’t matter if you make $150,000 a year or $20,000. Creating a budget is absolutely crucial if you want to keep your finances under control (which, yes, can actually be done). Sit down and think of all the things you need to spend money on. Think of your debts. Think of the things you don’t really need to spend money on as well. Think of how you can budget your income as well as possible and stick to your plan as much as you can because otherwise you will not be able to reach your financial goals.
3. Not giving your credit score the attention it deserves
Your credit score is a number that will follow you wherever you go: when taking a loan, when taking a mortgage and, in some cases, even when moving in rent. Not giving your credit score the attention it “needs” can affect you on the long-term. Yes, credit scores can be improved, but in order to do this you will have to be absolutely certain that you know what your credit score is at the moment and that you know what are the issues that have led to it.
4. Having a balance on your credit card
This is a mistake many, many people do. Carrying a balance on your credit card(s) ultimately means that you pay high interest rates for these cards. Eventually, this will mean that you will end up spending much more money than you actually have – and this is where all financial trouble begins. Analyze your credit cards and make sure you get rid of that balance as soon as possible!
5. Not making timely payments on your mortgage
Your mortgage is probably one of the most “fearsome” debts you have so making your payments in due time is always of the utmost importance. Of course, things can happen and you may be prevented to make a payment in a month. And this leads us back to tip #1 and why it is so important to have some money saved for the rainy days!