Money. You work so hard to earn money and yet it seems to disappear so fast. Even if you set aside money for later, you never seem to keep it for long, right? Some emergency happens or you just need a couple of bucks to buy lunch. Everyone makes personal money management mistakes. The key is to avoid making these money management mistakes in order to give yourself peace of mind and keep more money in your pocket. Here are some of the biggest personal money management mistakes you should avoid:
1. Living from paycheck to paycheck.
If you are paid on Friday and broke by Sunday, there’s a problem. Hopefully you have enough money in the bank to cover necessary living expenses for three to six months. Ideally you would have enough money to cover 8 to 12 months in case you fall on hard times. This requires setting money aside from each paycheck and placing it in the bank. If you have direct deposit, you can have the money you need to save placed in a savings account you can’t touch. This way, you’ll avoid a catastrophic money problem in the future when faced with an unexpected situation like job loss, illness or major home repairs.
2. Spending more money than you actually need to spend.
You probably dine out at your favorite restaurants a little too often. How many lattes do you buy each week? Do you love going to the movies a little too much? These small things add up to a huge hole in your pocket when you aren’t thinking about the long-term costs. For instance, your small daily purchases can add up to big costs in interest if you’re putting them on your credit card. Cut the needless expenses to avoid making this personal money management mistake.
3. Believing ignorance is bliss.
Depending on having a wealthy spouse, winning the lottery or creating the next great social media site isn’t the best way to approach financial security. Lack of foresight about your financial future may keep you in debt for the rest of your life. In fact, not wanting to face the facts about your current finances won’t make your troubles go away. Only if you become proactive and work through how to solve your debt problem will you avoid money mistakes.
4. You live like you’re wealthy.
Excessive borrowing is a major personal money management mistake. This may involve constantly using credit cards or overdrawing your bank accounts. Constantly paying only the minimum amount on your debts will only extend the time it takes you to pay it all off. Instead of borrowing and spending more, spend time creating and following a budget that clearly indicates how much money you have coming in and going out each month. Do not spend one cent more than you have.
5. Making poor investment choices.
You may be looking for a way to make big money fast. Unfortunately, get rich fast schemes only put you in further debt. To make money, you have to save money – even when you are in debt. A credit counsellor can help you make a plan to save while still repaying your debts with the help of a smart budget.
6. Lack of motivation to resolve your debt problem.
To avoid making these personal money management mistakes, you have to become disciplined. Commit to your budget and or paying your debts off. If you need help, turn to a credit counselling service for help.
Everyone makes these money mistakes from time to time. It’s easy to make these mistakes, but with hard work and determination – and a budget – you can avoid common financial pitfalls. For more tips on how to manage your money smartly, stay tuned to our blog. If you’d like to get in touch with a credit counsellor who can help you discover where you’re making personal money management mistakes, call Credit Counselling Services of Atlantic Canada today.