The key is to learn from your mistakes and change for the better in the future. If you don’t know that you’re making a money mistake, then it would be very hard to change.
Below are 5 money mistakes you may be making:
1. Spending more than you make.
This is a big money mistake that millions of people make each and every day. You should always create and keep a balanced budget. Don’t try to keep up with the Joneses and only buy items that you can afford that you actually need.
2. Thinking you can save money later.
If you are young, then this is a mistake you may be making. Too many young people these days think that they can save later because they they are young and invincible. That is just not true.
You never know if something will stop you from saving in the future. Also, if you can save money now, then why not? There is no need to spend all of the money you make just because you think you can.
3. Being house or car poor.
Don’t get me wrong, I am completely find with people buying their dream house or dream car as long as they can afford it. Everyone has different interests and everyone wants to splurge on different items.
However, it’s probably not the best idea to buy a house or car that you cannot afford. I know someone who bought a huge house, yet they couldn’t afford the property taxes on it, or even furniture to put in the home. What’s the point of buying something if you are drowning financially in other areas?
4. Skipping the emergency fund.
We have an emergency fund, and we pretty much have always had one. I don’t think I could go with out it. An emergency fund gives me comfort in that if something were to come up, that I could continue living life and not getting extremely stressed about it.
An emergency fund can cover possible job loss, a decrease in work hours, a home or car repair, or anything else that you want it to cover.
5. Not completely understanding how credit cards work.
This is something I have seen far too often. Too many people do not understand how credit cards work. You should understand what a minimum payment is, your interest rate, any late fees, when your expected payoff date is, and more.
Surprisingly, many people do not understand these terms and therefore rack up thousands upon thousands of credit card debt just because they are not knowledgable on the subject.
What money mistakes have you made?
Image via Flickr by Terry Presley