Money Mistakes

Spending money is way too easy, and saving for the future can be quite a struggle, especially if you’re living the paycheck-to-paycheck lifestyle. Indeed, it is hard to make smart choices when it comes to spending your hard-earned money, but you can at least do something to avoid money mistakes that can haunt you in the future, from overspending on things that you’re not supposed to spend on, to not saving for future emergencies.

Below are some of the most common money blunders and how you can avoid them.

Probably the most common of all money mistakes everyone makes, putting off payment of your debts and monthly utility bills has a huge negative effect on your future financially, as well as on your credit scores. Prioritize your debts and know which ones you need to pay off first. Make sure that you pay your debts on time or before the due date to avoid the exorbitant penalties of late payments and higher interest rates.

Moreover, always remember that utility bills are monthly recurring bills so you may want to set aside money for this every time your paycheck comes.

Credit cards are not really a good source of money during emergencies. In fact, your credit limit may not even be enough to cover the funds you need for emergency. Instead, you should start working toward creating an emergency fund. Set aside money each payday. It doesn’t matter how little you save. Over time, you’ll be surprised to see the amount you’ve built up, and these may just be enough to cover future emergency needs.

Using your credit card is not bad though, but make sure that you are using a good one, with low APR and annual fees. If you use your credit card, make sure that you pay your debt within your “grace period” which is usually within 30 days to avoid paying for the interest.

It is fine to treat yourself to some fancy dinner or buy a nice pair of shoes or a bag maybe from time to time. The important thing is that you don’t go over your budget.

The trick to doing this is to create a realistic budget and stick to it. Make a list of the things you need and want – know the difference between these two – and if these things don’t fit your budget, cross off those that you can live without until you have a list that is within your budget.

Also, trim your monthly expenses so you can free up some funds for the future. Having some savings set aside for other expenses will allow you to avoid getting into debt troubles. You may also want to look more closely into your expenses to spot financial leaks. These are small expenses that, when accumulated over time, eat up a huge chunk of your budget.

These are just three of the most common mistakes people make with their money, and there’s definitely a lot more. However, knowing what these money mistakes are is not really important. What’s more important is figuring out how to manage your money well and making sure you don’t end up in huge debt in the future.