5 common money mistakes to avoid
You might be wondering as to why you never seem to have enough money. You know that you earn a decent income. However, you never feel like you do not have any money justify over at the end of the month. Unfortunately, there are a number of traps that you could fall into that gobble up large chunks of your income and leave you with little or nothing. In this blog we will make you aware of the 5 biggest, common money mistakes you must avoid making. If you cannot avoid them you might end up being broke.
- Using credit rather than cash
Some of the recent studies show that people who buy stuff with credit cards generally spend 12% to 18% more than when they use cash. Apart from this In addition to this, it is often found that people who use credit to purchase things do not pay off their credit card balances every month. This causes them to spend 50% more on their purchases. So you need to do 2 things. The first is that you should ensure not to use credit and risk getting into debt, and the second is that you must protect yourself from impulse buying. To do that it is important that you setup your financial goal.
- Making only minimum amounts on credit cards
Often we tend to get away by paying the minimum amounts on our credit card payments. Though this may be the easy solution you may opt for to cut down on your monthly expenditure, you must realize that the outstanding amount would linger and you end up paying much more. This is without even realizing it. You may finally end up paying for years and thus paying a lot more than what you had initially spent with the same.
- Living in a home you cannot afford
You might think that it is a waste of money to pay rent to someone else when you could pay down your own home. But you need to be careful about this. People sometimes think that since they cannot afford a rental payment of say $1000 per month, they can afford a $ 1000 monthly mortgage payment. This is not true. You need to distinguish the difference between needs and wants. A good rule of the thumb is to add a 40% to your rental payment and this is what your own house will cost you every month. You must therefore avoid making the mistake of buying a house you cannot afford.
- Carrying an expensive debt
For many people it is only normal to be in debt. So they keep owing something on credit cards, overdrafts, etc. Some even take secondary loans to pay off their existing debt. The problem is that debts are usually very expensive, carrying high rates of interests on them SO it is best to avoid them to have a healthy financial situation.
- Not paying enough attention
This is a very common mistake committed by many. They do not consider their financial situation and just live from day to day. This can be a serious mistake over the long run and something which could lead one into serious financial situations. Thus it is always advisable to monitor your finances closely on a regular basis.
In conclusion, we hope that by considering the above mentioned 5 points you would be able to avoid then and thereafter have a healthier financial future. At “The Accounting and Tax”, we have been providing consultation on financial matters in Canada and North America since long. In case you need any consultation in regard to your finances please get in touch with us.
