Living a healthy financial life is a lengthy learning process that many people constantly struggle with. Here are four common mistakes that you can work to avoid to help ensure your financial security:
Mistake #1 – Living on Credit
While having a credit card to help you build your credit is a good idea, swiping that card for all of your expenses is a really common but really big mistake. Before you use your card make sure you have the money in your bank account to be able to pay it off immediately so that you won’t be living in debt. Building up these charges on your card and not paying them off right away means that in addition to hurting your credit you’re also going to end up paying interest on things you’ve purchased. Never think of a credit card as free or extra money for you to use each month, and only spend what you actually have in the bank.
Mistake #2 – Having Too Many Recurring Payments
So you think you need to have Netflix, Spotify, an expensive gym membership, Amazon Prime, Hulu, cable, and any other number of subscription services, but have you ever stopped to look at just how much money comes out of your bank account each month because of these ‘necessities?’ Paying for multiples of one sort of streaming service or not shopping around for your utilities can really hurt your bottom line. Stop and assess which services are most important to you and eliminate unnecessary spending.
Mistake #3 – Not Having Any Savings
Make sure you have a savings plan and an emergency fund built into your budget as waiting to start saving money is a common but serious mistake. Living paycheck to paycheck can be very stressful as any unexpected expense can cripple your financial situation. In addition, the sooner you start saving the better off your retirement fund will be as starting to accrue interest at an early age means you’ll have to save less in the long run.
Mistake #4 – Buying a Brand New Car
Buying yourself a car can be an exciting experience, but don’t get carried away and begin to think you need the newest or fanciest car on the market. A brand new car will cost more to insure and will lose value as soon as you’ve driven it. Before you start the long process of finding the perfect car, sit down and budget how much you can realistically afford while still being able to live comfortably and continuing to save. No matter how much you might want a car that goes over that budget remain strict with yourself and only allow yourself what won’t end up stressing your finances.