Managing your finances can be a real pain, and there are lots of mistakes which people seem to make when they’re trying to sort out their money. Some of them are unavoidable, but a lot of them could be avoided by a little bit of forward thinking and better planning. If you’re worried about how you’re managing your finances and you want to watch out for some of the worst mistakes you can make, here is some good advice!
Overspending is probably one of the most common financial blunders that people make in every day life. Whether it’s going to the pub and buying too many drinks, buying more clothes than you anticipated on a Saturday afternoon or buying more books in the book store than you can really afford, there are a whole load of ways in which we overspend. You should be really careful of this, especially if you’re somebody who seems to spend more money that you think you have. If you’re the type of person who comes home and can’t believe how much you’ve spent, you need to start being a little bit more careful when check secured online gambling you go on shopping trips!
The Solution: The solution to this problem is to make a good budget and to stick rigid to it. Try it for a month and see if it works for you. If you find that you’ve been able to cut down on the spending, you’ll probably continue and make a budget each month. As long as you have a good idea of things you need to spend money on, things you’d like to spend money on and how much money you earn each month, it shouldn’t be too difficult to do and will only take up about half an hour of your time!
2. Getting into debt
Debt is inevitable for most people, and the most common kind of debt is taking out a mortgage, and this is considered “good debt” as opposed to “bad debt”. Examples of “bad debt” are short-term loans, pay day loans, lots of credit card debt and buying things on credit. You should be very careful if you have credit cards or you’re planning to get into debt. A lot of the time, it can be avoided. Even if you think that you desperately need a short-term loan because you can’t pay the bills until pay day, you could probably find an alternative solution. A lot of the time, parents and family members would be more than happy to lend you a small amount of money until you can pay it back; however, for a lot of people, it’s an issue of pride. People would rather borrow money and end up paying back lots more in interest than admit to family members and friends that they can’t afford the bills this month.
The Solution: Be very careful how much debt you get into, and avoid credit cards if you think you’re likely to go overboard with the spending. For those in debt, have a look at top 10 reviews of debt consolidation software which can help to significantly lower the amount you spend and help you to get out of your debt problems. Having one credit card isn’t bad, as long as you can pay it back each month and you have a fairly low limit on it.
3. Spending on occasions
Another of the biggest money mistakes that people make is spending too much when it comes to special occasions. Christmas is one of the worst times of year for those trying to manage their finances properly, but birthdays, Easter, christenings and Halloween parties can be just as bad. A lot of credit cards and other types of loans are taken out around the time of national holidays or celebrations like Christmas, showing that these kinds of holidays really do have a bad impact on our finances.
The Solution: If you know a special occasion is coming up, set a budget for the occasion a few weeks or months previously. Since you’re anticipating the occasion, save up some extra cash for the day so that you don’t struggle to find money to cover the costs. Create a good budget which covers everything you might need, and if it’s a birthday party, for example, ask other people to help with the costs too. You could ask each guest to bring some food or drinks, so that the cost is being split between the whole party and everything isn’t being paid for by you alone.
4. Missing repayments
Missing repayments on any kind of loan or debt has terrible results, and you could even end up being taken to court and having to pay for all the legal fees yourself! If you take out a loan, credit card or direct debit, make sure that you have the means to pay for it each month so that you don’t miss any payments. Missed or late payments result in hefty charges, which make it even harder to pay back the debt and make further payments.
The Solution: Make a list of all the payments which come out of your bank account and make sure you have enough money in there for when they’ll be coming out. If you have to physically make the payments yourself, set up reminders on your phone or email so you don’t miss the deadline. Usually, the money needs to be paid on the same date of each month, so write down the date next to each point on the list to ensure you don’t forget.
5. Spending little amounts
It’s amazing how smaller amounts of money soon add up over the course of a week, and if you sat down and added up every bit of “loose change” that you’ve spent this week, you’d probably have a shock! The coffee you buy each lunch time for example could probably buy you a new pair of shoes after a month, and the snacks you buy from the local shop probably cost you more than you’d like to think. While one small purchase is a small one, several of them will soon add up to a larger purchase. If you have too many of these smaller purchases and you get rid of too much loose change, you’ll soon find yourself having financial problems and probably being unaware of the reason why!
The Solution: As an experiment, carry around a little notepad or make a note in your memo pad on your phone each time you make a purchase that you consider to be small. This could be a bar of chocolate, a cup of coffee, a donut or a small item of jewellery. After a week, add up the small purchases that you’ve made and see what the total is. Before you start your experiment, have a guess how much you think you’ll spend and see how close you were to the actual amount. You might find that you spent much more than you thought you would! For another week, instead of making your small purchases, put the money into a jar at home each time you change your mind and buy yourself something bigger at the end of the week!