4 Money Mistakes And How To Avoid Them
Managing money sounds easy, but at times you may make mistakes or pick up a bad habit that will not just affect your financial well being bit also your emotional health. Various surveys have found that money is a top cause of stress. Many people think that having more money is the only way that will help them to get rid of stress. But since it is not easy to have more money, until and unless you have won a lottery or stumbled across a treasure, you will have to act smartly with the money that you have. Once you start exercising better habits with your money, you might soon end up with more of it. But before that learn about the four common money mistakes you may be making and how you can avoid them.
Paying Bills Late
One grave mistake that most people make is paying their bills late, not because they do not have the money, but because they forgot or some other important work popped up. You should very well understand that such bills are unavoidable and not paying them can only get you into some financial difficulty. The best way to avoid it is to set reminder on your mobile phone, calendar or computer. You can also set up automatic bill-pay when possible. When you keep delaying your credit card or other bill payments consistently, the interest rates and other credit based service fee will keep rising.
Not Having Or Following A Budget
Creating a budget and sticking to it is an important tool to your financial security. But at many times people either do not have a budget or do not follow it. Having a vague notion of how much money is in your checking account and how much you are going to spend in a month is not enough. Keeping a budget is the best way to take care of your money. It is like a roadmap that will help you to keep a track of where your money goes. It will also help you trim your expenses. When creating a budget be realistic and have one that you can stick to. It is not at all complicated to create a budget. You can simply total up how much money you make in a month and subtract your regular monthly expenses such as rent and transportation and putting 20 percent of what is left in savings and emergency funds. You can use what is left over for things such as entertainment and eating out.
No Emergency Fund
You may wonder why you would need an emergency fund. No one ever requires emergency funds until and unless they have one. So, when you have spent all your money toward entertainment or to pay off your debt, it will be difficult for you to deal with unexpected medical bill, auto repair or any sort of unplanned emergency. So, start your emergency fund right away. You can start by taking out a small amount from your paycheck every month and set it aside. Save up until you have enough money to survive three months total living expenses. If you can afford, keep saving more.
Building Debt And Not Wealth
Many of you may often use credit cards, but unfortunately not everyone pay their balances monthly. You may be so engrossed with your present expenses that you do not give priority to save for your future expenses and retirement. So, instead of building debt, build your wealth. Try to open a savings account for each goal you have that can be your college debt, new car, house and vacation. Put a little from your paycheck in these accounts every month. Once you have started saving, the amount will automatically add up quickly. You can then utilize the money to work for you. Having enough savings will help you to reduce debt instead of racking up more of it.