10 Money Management Mistakes To Avoid May 20, 2016My MoneyOff

With the wealth of tools and help we have available to us, we really shouldn’t be making any basic financial errors. And yet, people still do! From impulse buying to lack of organization, we’re all guilty of at least a few of these grievous errors.  So, have a read through and see which apply to you; and cut them out!

  1. Assuming you’ll be funded for retirement

Assuming that a state pension will be enough for you to have a comfortable retirement is folly. It’s a basic level of income that will just about cover your food and bills. You’ll certainly need more than that if you’re going to survive old age.

So, open a private pension as soon as possible. If your employer runs a pension scheme, enlist. It can’t hurt to build up a little more cash. If you do end up with more than you need, that’s a lump sum you can give to your kids and grandkids.

  1. Taking monthly credit, instead of saving monthly

If you want that computer, TV or games console, you can get it right away and pay monthly. However, these monthly fees are usually piled with interest, meaning you shell out more than the product is worth.

Instead, have a little more patience, and save up each month for the product instead. You may have to wait a while, but you’ll only pay what the item is worth and nothing more.

  1. Not having your accounts prepared

If you’re a business owner, self-employed or a working professional, it’s vital that you keep accurate accounts. Understandably, if you work a lot of hours, the last thing you want is to trawl through spreadsheets. So get help!

A professional accountant may come in handy for those who work long hours at an office, and a business accountant would be good for managers. If you don’t organize your books and pay your tax bill on time, you could incite a fee. So get on it!

  1. Taking the maximum student loan you got offered

If you’re lucky enough to be of student age, you have to play things smartly. Your student loan will have to be repaid when you start earning over a certain amount. You’ll pay it back monthly, and this process can carry on for many years.

So, when you’re applying for a student loan, don’t take the maximum offer. Draw up a rough budget and see how much money you’ll need, and take just over that amount. Borrowing the maximum amount will leave you with more to pay back, and you’ll probably just waste most of it on drinks and clubs anyway.

Also, if you get a part-time job, you’ll have even more income. Play it smart and consider your future!

  1. Inflating lifestyle along with salary

When you get a new job with a higher salary, it can be tempting to start spending more as a result. But why? If you were comfortable before, do you need to change it?

Sometimes, the biggest reward is knowing that you have plenty of cash set aside for a rainy day. Spending it all on immaterial goods like watches and clothes won’t help you fix that leaky roof, after all.

  1. Paying for everything

Everyone likes a nice person, but don’t let that damage your financial future. When you’re going on a night out or a family meal, it can be tempting to pay for everything, but don’t.

Sure, it’s a nice gesture, but it leaves you out of pocket. Your friends and family are more than capable of paying for themselves – would they be there if you couldn’t. It’s ok to buy people a drink or two, but keep your friendly spending to a bare minimum.

  1. Neglecting non-monthly expenses

Some expenses, like bills, roll around each month. You know when they get paid, and it’s easy to do so. These expenses are easy to organize, but others aren’t.

But what about those non-monthly expenses? This is things like birthdays, anniversaries and holidays, stuff that rolls around once in a while. I’d recommend you start treating these like a monthly expense. You know when your anniversary is, so start saving for it six months in advance.

  1. Wasting sudden windfalls

Whether you win the lottery or get an inheritance, it can be tempting to splash out and waste the bulk of it. This is a mistake, for obvious reasons.

Firstly, immaterial goods are just that; immaterial. You don’t need them. It would be far more practical to invest that money and watch it grow. You should also set some aside for a rainy day, too.

  1. Impulse buying

We’re all guilty of this one. We all see those cool gadgets on the TV, and immediately sign up for a high-interest monthly repayment plan. Besides being a useless purchase, this ropes you into an unavoidable, additional monthly expense.

We’re also guilty of this at the supermarket too. Those strategically placed DVDs and chocolate bars are kept by the tills for a purpose. The store managers know that you’ll eye them up and will likely buy them.

You have to know when enough is enough. Set yourself some spending money, and stick to it. You don’t need that chocolate bar, or that fridge magnet.

  1. Not having any kind of budget

If you get your weekly or monthly wage and just go bonkers without any kind of plan, you’re making a mistake. Not only will you probably overspend, but you probably won’t buy everything you need, too.

Start by calculating your monthly bills. These are those unavoidable expenses like electricity and the mortgage. Remove those from your paycheck, and see what you have left. Next, set aside a certain amount for food. This is your limit, and you have to challenge yourself to stay within it.

Anything you have left over is your spending money. Budgeting this way allows you to clearly see what is being spent where, and helps you stay within your financial limits.

And there’s your list? Do you commit any of these? 

Photo by Docent | Shutterstock

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