12 Personal Finance Mistakes You Could Be Making
Nobody’s perfect, as the saying goes, and nowhere is that more true than in the world of finance. Despite our best efforts, all of us will likely make personal finance mistakes that could seriously cost us in the long run.
Whether it’s money mismanagement, not creating a proper budget, or simply spending on things we don’t need, financial mistakes are as costly as they are commonplace. Here are 12 common personal finance mistakes you could be making.
Not having any savings
Not putting any money aside for savings is a very common financial mistake. Statistics show that almost 10% of British people don’t have any savings, for example, and this could pose a serious issue later down the line for them.
Of course, you may not be able to put aside savings due to money worries or a low income, but if you can, you should be making sure to allocate some of your pay to savings.
Missing out on loans
Taking out loans isn’t the financial death sentence many people think it is. In fact, if you’re in a reasonable position but could just use a little extra help, applying for online loans could be a serious boon and could lift you out of financial trouble. It could also have the added benefit of boosting your credit score, making it easier to secure things like mortgages later on.
Not creating a budget
Like many people don’t have savings, many don’t create budgets for themselves. You could be missing out on a substantial financial health boost if you don’t have a budget; after all, if you’re just making educated guesses regarding how much you have to spend, you could be wildly overestimating or underestimating your total spending. Ensure you’re building a budget if you care about your financial well-being.
Not looking for help
Too many people try to soldier on through financial difficulties alone. The reality is that you don’t need to do this; there’s so much financial help out there that not taking advantage of it would be foolish. Even if you don’t have the money for professional aid, talking to friends and family can have a surprisingly positive effect, so make sure you’re not suffering in silence.
Not changing spending habits
If your spending habits are to blame for your financial difficulties, it stands to reason that you should try to change them. Still, many people simply attempt to weather a crisis without actually making any real alterations to their spending. To revise your budget, you should also ensure that any actionable spending changes are being implemented rather than just considered.
Not reading the small print
If you are struggling through financial difficulties, then, unfortunately, not reading the small print on loan agreements or other financial documents is a luxury you no longer have. You’ll need to make sure you go through everything you sign with a fine-toothed comb, looking for hidden fees or other terms and conditions that could bite you later.
Having too many credit cards
We know that it’s nigh-on impossible to avoid getting into further debt if you slide just a little into trouble; that’s one of how some debt companies can sting you. However, one of the biggest financial mistakes we see people making is having too many credit cards. If you can, try to keep your credit spending to just one or two credit cards, or the repayments could overwhelm you.
Buying everything new
You’re spending much, much more than you have to if you buy everything new. The fact is that a huge amount of things you use daily – clothing, cars, and electronics, to name but a few – can be bought pre-owned, and you won’t lose anything in the bargain if you do. Pre-owned goods are often hugely cheaper than their new counterparts, so browse pre-owned markets before committing.
Prioritizing debt wrong
If you have multiple sources of debt, then it’s easy to get your priorities wrong and pay off the wrong ones first. This would be a serious mistake. However, you should make sure that you’re focusing on the debt that will be the hardest to pay or that is demanding the highest repayment value from you. That way, you’ll be able to lessen the financial impact of your debt and improve your overall financial health.
Keeping up unused subscriptions
It’s straightforward to lose track of the mountain of subscription services that modern life makes us sign up to. Amazon Prime, Disney+, Netflix, Spotify…the list goes on and on, and there are subscription services for everything from food to entertainment to travel. Many of these subscriptions can pile up without us even realizing they have, so ensure you’re checking regularly for subscriptions you aren’t using.
Not checking your credit score
Your credit score can affect a surprising amount of things in your life. For instance, did you know it can be challenging to get a job if you have a poor credit rating? It’s true; employers can sometimes check your credit rating to see if you’re reliable, and if they don’t like what they know, they could refuse to hire you. Checking your credit rating regularly should stop you from encountering any nasty surprises.
Not having long-term goals
Everything in your financial life should be working towards a long-term goal you set. Do you want to travel, for instance? Are you saving up for a house? Is your long-term goal simply to be free of debt? No matter what it is, having such a goal can help you focus on what matters to you; it can give you something to think about when considering spending money on something you don’t really need.