We make mistakes, a lot of mistakes every day! Every small money mistake turns costly in the long-run, even without our realization. Hence, it is important to observe our habits and figure out the common mistakes we make on daily basis and then fix them to secure our financial future. Here we compiled a few top common money mistakes households make. Read through to give a check.
- Giving kids everything they want. These emotional acts do no good for both parents and children. Parents lose money (an act of misuse of earnings) because of these uncommitted or unwanted purchases, whereas kids grow up without understanding the value of the money.
- Entering the debt cycle to make purchases. Impulse purchases are the major cause of money loss. And borrowing money for making purchases is not the wise thing to do. Also, seeking hand-loans to recover from temporary financial shortfalls will not allow you to get out of the vicious debt cycle.
- Signing tax returns without reviewing. Even when you are filing for tax returns through a tax planner, ensure to give a thorough review before signing them.
- Not saving for retirement. Nothing else can be a greater self-damage than this. Saving and accumulating for retirement takes time, a lot of time! Ideally, contribution towards the retirement saving should begin from the time you start your earnings. However, it is never too late to start. Try to save at least 10% from every month’s income towards your retirement goals.
- Making a minimum monthly payment on credit card bills. This does not help maintain credit score and will not allow recovering from the credit interests. In simple, minimum credit card payments mean paying maximum interest! Also, make use of credit card convenience checks to keep a tap on purchases and reduce the temptation to grab the offers that come with the credit card.
- Having no proper financial planning: Tracking the expenses and income are the least things you can do to understand your finances. Such data helps identify the loopholes and make required corrections.
- Having no emergency fund. It means you are not prepared to face emergencies like a layoff, medical requirements, etc. Eventually, you end up borrowing to meet the unexpected money needs. Even if you have built an emergency fund, tapping it for non-emergencies doesn’t serve the purpose.
- No Insurances. Without planning for a suitable insurance kitty, your savings are not safe. You may have to deplete your bank balance for some unexpected requirement, which could otherwise be met with the right insurance policy that was bought on time.
- Investing without a strategy. Without a strategy, you go nowhere. You will not have a direction to follow and a destination to reach. Define a proper purpose to move ahead in the right direction by making meaningful and useful investments.
- Having a term life insurance for more than the required period. Life insurance is required when you have dependents. And it is necessary to have it until the youngest kid leaves the nest. Plan accordingly.
In conclusion, every household has to scrutinize his or her finances to understand every minute transaction and ensure that the hard-earned money is put to the right use. Learn more about your personal finance habits and tighten the loose areas. Secure your financial future by taking well-informed decisions.