Everyone wants to be financially secure, but it’s easier said than done. Don’t despair, people have been making financial mistakes dating back to the stone age, so you’re not alone. Poor day to day spending habits can affect your long term financial stability if they’re not recognized and rectified. Financial hardship doesn’t happen overnight, so to avoid it springing up on you, familiarize yourself with these common mistakes and try to avoid them.
Paying your bills late
We’ve all made a late payment here and there, which isn’t really going to have serious repercussions. The problem comes in when you’re making late payments all the time. This will have an effect on your credit score, which in turn means you’ll have difficulty qualifying for a loan should you need one. Not to mention late payment fees as well as possible extra interest charges.
Depending too much on your credit card
It is a great luxury to have a credit card facility for those expenses that are unexpected and you didn’t budget for. However, if you’re using your credit card frivolously, then you’ll soon find yourself in a spot where you cannot make the monthly repayments and then the backward spiral begins. Try to keep the credit card use down to essentials only. Also, when it comes to repayments, pay more than the minimum required whenever possible.
Know how much money you have available
You should always know how much money you have available in the bank. Also, keep in mind that some purchases take a day or two to clear when controlling your balance. This will prevent any unnecessary overdraft fees being charged. Try to review your account weekly, always check your monthly statements for any irregularities, and set up an alert system that notifies you when your bank balance is low.
Living from paycheck to paycheck
When you start a job, it is expected that you would live from paycheck to paycheck, as you might live in the moment. As you get older, that is a habit that you should move away from because that way you have no room to put any money aside into a savings account. To break away from that cycle start off small by putting a little aside, then build up as you see fit when possible. Account for expenses spent, and don’t shop impulsively.
Overextending your budget
There comes a time in everyone’s life that you feel you need a little holiday or to treat yourself to something out of the ordinary. When such a time arises we tend to forget about our budgets and spend anyway. Even something as small as the latte you get before work every day can add up and make you go over budget. Once you’ve created a budget, stick to it, and only veer from it if your bank balance allows it.
Unnecessary monthly expenses
We all have those monthly expenses that we can do without. Music subscriptions, cable television or gym memberships that are unused. Such expenses take your money without giving you any returns, and you’re left owning nothing at the end of the day. When money is tight, these are the first things you should cancel.
Life isn’t all about counting your cents, so wherever possible, find a way to enjoy the little luxuries by not putting too much strain on your wallet.