Money is a test.
It makes you feel invincible (even if for a small time). It opens up so many options for you — asking you to choose. And in the end, it can generate guilt for not utilizing it more smartly.
Ultimately, it’s not about how much you are earning. But about what you are doing with that and how much you are keeping.
It’s hard to keep the money if you keep making some money mistakes
Here are seven money mistakes that you should avoid.
Seven Money Mistakes to Avoid
1. Staying loyal to expensive providers
You might be sticking with your bank or cellphone provider for years. But they don’t care about your financial well-being.
Their objective is to take more money from you. And your objective is to get the most value for every dollar you spend.
Just because you have been with a provider for a long time, doesn’t mean you can’t switch.
Always. Be. Comparing.
You might think saving a few dollars here and there won’t make much of a difference. However, it does in the long run.
2. Not maintaining an emergency fund
In this age, when you can be laid off at any minute, you must have an emergency fund.
Even if you have a steady income, you don’t know when a medical or any other type of emergency will strike.
Your emergency fund should be able to cover at least a portion of that.
But don’t get too consumed with this idea. Decide a reasonable amount that you want to save (maybe six months’ expenses). And then stick to that and enjoy life with the surplus earnings.
3. Not having a personal budget
Personal budgets can feel limiting.
They are also hard to maintain.
However, a budget can allow you to save hundreds of dollars every month, if not more.
That savings will accumulate over time and allow you to spend on what you love.
4. Not investing for future- retirement, and expenses
Be ready for your retirement.
Be ready for big expenses like a wedding or college or a down payment for a house.
If you are not saving for your future, you are creating financial difficulties for your older self.
5. Taking cash out using a credit card
Never do that.
Banks charge higher interest if you take cash out using a credit card.
Use the money you have on your debit card. Banks often have customized loans that you can take against your credit card limits. Talk to your representative and figure out the best rates for you before you take a loan.
6. Paying off the wrong debt first
Some debts come with lower interest rates. Some give you tax benefits.
It’s often a good idea to get rid of debt fast. However, choose the one that’d benefit you financially.
7. Using a credit card to do impulse shopping
It’s recommended to do even grocery shopping with a fixed budget — if possible with cash.
Shopping impulsively with a card can get you into a steep and brutal loan.
Avoid that at any cost.
Personal financial management is not difficult if you avoid the basic mistakes.
And then, if you take a few good decisions, you’d be on your way to building a strong financial future.