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You’ve heard “it’s the little things that count”, right?
I’m sure everyone can name many little things that have more meaning than a big event in their lives.
The same can be said about finances – it is often the little things you do, the small actions you take, that have the biggest impact on your financial security, both in the present and in the future. Of course, this concept is true whether the little things are positive or negative.
So, in this article, we’re going to look at 10 small money mistakes that many people make, often unaware of the impact they are having on their financial security. Read through them; identify the ones that you are guilty of and take the necessary steps to turn it around.
Not Having a Budget
I know, you’ve heard it all before but have you taken action on this one yet? A budget provides you with a financial roadmap to get to where you want to be in life. A budget helps you track your finances so you know exactly where you are and whether you’re on track. A budget gives it to you plain and simple – the good, the bad and the ugly. Not having a budget is a small mistake that can turn into a huge financial error!
This type of over-spending has an accumulative effect. It’s those little things again – the little things that seem not to matter at the time. So look at the take-outs you buy, the dinners out, the expensive designer coffees, the magazines, the impulse buys of things you really didn’t need, the ‘stuff’ you buy without thinking it through. Controlling careless spending of even $5-10 a week and putting it into savings, can add up significantly over time.
Having Multiple Credit Cards
Buying with credit cards leads to spending more than you earn and we all know where that leads. Interest rates on credit cards are usually the highest around so you are actually paying many times what the item is worth. The more cards you have, the greater the problem, so start by paying off the smallest balance and cut up that card. This small money mistake has a sub-section – accepting the so-called ‘free’ credit card upgrades or new cards. Increasing your credit card limit is really increasing your debt, or at least your exposure to debt, so say ’No!’
Living Paycheck to Paycheck
Living from paycheck to paycheck is a dangerous and precarious practice. Many people think they have no choice in this but the reality is, most people can find small ways to cut spending so that they can put a small regular amount into savings.
Buying Items On Sale
We all love a bargain, but buying something we don’t need just because it’s cheap, isn’t a bargain. It’s wasted money.
Making Never Ending Payments
You know the ones I mean, when you sign up for a product or service that requires a monthly payment, directly debited continuously from your account. This includes cable TV, magazine and radio subscriptions, movies, pagers and cell phones. You keep paying but you don’t ever own anything. Get rid of ones you don’t need; stopping some of these never-ending payment plans is a great way to start savings.
It is dangerous to spend every cent you earn and not to have buffer against illness, injury, job loss or hard economic times. Make establishing an emergency fund a priority.
Ignoring Your Debt
Debt is not just going to go away, you must handle it and work to whittle it away. There are many debt-reduction strategies that will help you reduce your amount of debt and therefore the amount of interest you are paying. The key is to take action, even small ones.
Not Being Properly Insured
You are the wage-earner, the care-giver, the home-maker, whichever of these titles you hold. If anything happened to you, what would happen to the household? Look into effective health, disability and life insurance plans.
Not Having a Financial Plan
Having clear financial goals helps you control spending and increase savings because you know where you are headed. When you don’t have financial goals, you risk spreading yourself too thin which exposes you to increased debt and financial disaster.
I hope that reading these 10 small money mistakes will help you reassess your own financial situation and behaviors. Once you know the problem, you can take steps to correct it. Trust me, being proactive is worth it. I haven’t always been so money wise and have made many of the mistakes that I have mentioned above. I don’t want you to have to learn the hard way like me so get on top of things now.
So, have you made any of these mistakes? What have you done to rectify them?