Buying flashy cars and not planning for the future are just a couple of mistakes people make with their finances.
Unfortunately, there is quite a gap between what people would like to do with their money and what they actually do. For many, buying a house, taking trips with family or even retiring may present difficulties if drastic changes aren’t made in spending and saving habits.
Financial planning is vital for attaining realistic goals. Investing for the future should be a regular habit.
Here are some common financial mistakes that people make.
Not paying bills on time
Many people look at credit cards as a means to improve their lifestyle. So the end of the month rolls around and you receive that dreaded envelope in the post from your credit card company.
If you've ever paid a bill late, you will have probably noticed that you're charged a fine.
Brushing aside your bill or ignoring it all together could be detrimental to your credit rating and cost you more through the interest payments.
Trying to make an impression
Just because your neighbour has a flashy new TV, doesn’t mean you need to get one.
Buying for status is perhaps one of the worst financial mistakes. There is no evidence to prove that impressing others with a fancy car can make you happier. In fact, the debt you take on while acquiring these assets could prove to be costly. Never think about what others have as there are financial consequences of buying more than you need.
Overusing credit cards
Time and time again cards are used to purchase the smallest of things – from a loaf of bread to a packet of crisps.
The cost of the items you have charged becomes the purchase price plus interest. Before you know it, you’ll have filled the car up with petrol, bought a new duvet cover and have acquired the entire Monty Python DVD box set. Next time you make impulsive purchases, ask yourself if what you are buying is worth the interest.
Not planning for the future
Taking control of your spending and managing your money can help pave the way to achieving financial goals.
Failure to plan ahead can be a result of inexperience or may even be attributed to ignorance and fear. Although you may not want to face the future, it is just around the corner and without significant planning, you will find life much more difficult.
Lack of life insurance and health insurance could leave you in a difficult situation if problems were to arise. After all, life insurance is an asset for an individual.
Acting as a guarantor
Those of you with good credit may sometimes be tempted to guarantee a tenancy agreement or mortgage for a friend or family member with a history of financial problems.
But be prepared for what this implies. When you guarantee a mortgage or tenancy agreement, you’re taking on a risk that a professional lender or letting agent won’t take. If they can’t repay the debt, then you will be responsible for it. You may be better off staying away from playing the sugar daddy or a good Samaritan and keep your financial records on track.
**This material is for information purposes only and should not be considered financial advice. We strongly encourage our readers not to rely solely on this content, but to seek independent advice when making financial decisions.**
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