Wasted Potential: The Biggest Mistakes People Make With Their Money

Most people would agree that using their money wisely is an excellent way to live a happy life. You don’t need to become wealthy to get all the things you ever wanted. The most important elements of your existence are things that don’t cost a time. Spending quality time with your family is what makes you feel content and fulfilled. So, you just need to make sure you have enough cash to cover your bills with a bit to spare. Today, we’re going to spend some time highlighting all the common mistakes people make with their finances. With a bit of luck, reading about them will help you to get things right. If you make any of the errors mentioned on this page, you could end up in a sticky situation. The last thing anyone wants is to face mountains of debt. So, use some common sense and pay attention.

Not saving enough. It’s tempting to spend your spare money as soon as it hits your accounts. However, that is the last thing you should do if you want to achieve financial stability. You must make sure you always keep some cash aside for a rainy day. You never know when your washing machine might stop working and you have to purchase another. Likewise, it’s impossible to tell when you might face lots of different expenses. So, you should always have a bank account for which you don’t have a card. That way, you can’t withdraw money from a cash machine, and you can’t use the account to make purchases. That money is reserved for when you need it most, and you should try to keep it in your accounts as long as possible.

Impulse purchases. Impulse purchases are not a sensible move when you’re trying to control your finances. However, you shouldn’t blame yourself too much for succumbing to temptation. Retailers use smart psychological techniques to encourage you to spend money. That is why you always smell fresh baking when you walk into a supermarket. It’s also why chocolate and other small items are always placed near the checkout. There’s some information on that at http://www.cbsnews.com/news/the-american-habit-of-impulse-buying/. You just have to employ some self-control and become aware of their strategies. That is the best way to make sure you don’t spend cash unnecessarily. Write shopping lists before you leave home and always stick to them. With a bit of luck, that should mean you never come back with items you didn’t want to buy. The retailers won’t feel happy, but your family is going to reap the benefits.

Using credit cards too often. There are a couple of reasons people use credit cards. The first is that they can seem convenient when you need to make a substantial purchase. However, you will end up paying lots of interest if you don’t remove the balance during the first month. So, you end up paying too much for something you couldn’t afford in the first place. The second reason is that credit cards can help to improve your rating. By spending money and then clearing the balance, your score should improve. Nothing is wrong with using credit cards for that reason. Just make sure you don’t get carried away, or you’ll end up in a lot of debt. Credit cards are the number one reason for consolidations and bankruptcies in the US today. Just spend some time researching the subject on Google, and you’ll soon realize just how many issues they can cause.

Applying for-high interest loans. When you don’t have enough cash to pay for something, you might consider getting a loan. That is all well and good if you contact your bank or a reputable private company. However, there are lots of sharks out there that provide money with ridiculous rates of interest. In some instances, those rates can exceed 3000 percent, and it’s not a crime. So, make sure you always read the small print carefully when accepting any form of lending. The monthly repayments on high-interest loans could leave you without enough money to support your family. That is why you must understand all the ins and outs of any deal before you sign on the dotted line. If you’re not 100 percent certain you’re making the right decision, you should walk away.

Failing to invest their savings. Making solid investments with your savings could help you to boost your income. If you’re smart, there are many different ways in which you turn your capital into profit. An article at https://oilandenergyinvestor.com/2014/11/this-energy-stock-has-more-than-doubled-the-sp-500-without-finding-a-drop-of-oil/ highlights that fact. You just need to select the right niche and get to work. Energy investments are always going to provide a healthy return. However, they can seem complicated if you’re new to the process. So, perhaps you’d like to start with property or precious metals initially? That would give you some confidence in the process and encourage you to feel braver with your money. Remember, there are always brokers you can contact to manage the investment process on your behalf. You just have to read some online reviews.

Accepting a mortgage that’s too expensive. Everyone gets excited at the prospect of purchasing their first home. However, many people make mistakes by taking a mortgage that’s far too expensive. Just because the bank is willing to lend the money, that doesn’t mean you can afford the deal. In most instances, they will offer around five times your annual salary. Between the average couple in the US, that means the bank might lend somewhere in the region of $200,000. Don’t accept the full amount unless you have a screw loose. The repayments would leave you without enough cash to plan family holidays and have an excellent life. You should always try to keep any lending as little as possible, especially when purchasing a home. Remember that, and try not to get carried away when to see those dollar signs.

Opening the wrong bank accounts. There are a million and one ways to waste money in this life. Even so, opening the wrong bank accounts is by far the silliest. At the end of the day, the bank uses your money to make investments every single day. That means you help them to make millions in profit every single year. With that in mind, you shouldn’t give them more of your cash than is necessary. So, make sure you never open a bank account that requires a monthly fee. The very idea of paying them to use your money is mental! You should avoid that at all costs. You should also ensure that your savings are kept in a high-interest account for the best results. Spend some time researching your options online before you next visit your bank.

Not creating a will. Nobody wants to think about what’s going to happen when they die. It’s a depressing thought and one that most of us will avoid at all costs. However, you need to make a will if you want to look after your children. In some instances, people who don’t create that document will never manage to pass their wealth to their kids. That is because the state will take a large chunk of your capital at the very least. You need to contact an experienced lawyer as soon as possible to discuss your options. For a small fee, they will help you to write your will and get all your affairs in order. You worked hard your entire life for everything you have. Make sure your children benefit from that when you’re gone. Otherwise, it was all for nothing.

Failing to create monthly budgets. Creating a monthly budget is one of the best ways to keep a close eye on your finances. If you know all the purchases you have to make in advance, you can predict your financial situation well into the future. That means it’s much easier to work out when you might afford your next vacation. It’s also possible to see if you’re going to have enough cash for the kids presents this Christmas. Make a spreadsheet to manage your money, and ensure your budget never exceeds the amount of money in your accounts. Don’t make impulse purchases, and stick to your plan every single day. You will soon notice a drastic improvement, and you’ll discover all the ways in which you wasted income in the past.

We wish you the best of luck with your financial situation this year, and we hope you don’t make too many mistakes. Everyone gets things wrong from time to time, but you just have to deal with the situation. The information on this page should help to ensure you don’t follow in the footsteps of everyone else. Make sure you consider all the points in this article before we get too far into 2017. You’ll thank us when you’re feeling comfortable this time next year, and you have money for a fantastic family holiday. However, you’ll kick yourself if you end up in debt by making the errors listed here today. Don’t say we didn’t warn you!

Photo by Docent | Shutterstock

Share this Article

Recommended

Sign up