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How to Avoid Common Money Mistakes
If you are wondering how you are supposed to save, pay off your debts and still make ends meet while you get through daily life, you are not alone. You either have to earn more or spend less.
As it is much easier for you to cut back on your spending, than to earn more, that will be the method on which to concentrate.
Here is a list of money mistakes that you can avoid, and keep you on track,
Budget for the short term i.e. a monthly budget, but ensure you maintain an annual budget alongside. Most annual expenses are overestimated, while monthly expenses can be underestimated.
Unmonitored Spending Habits
Do not go shopping if you are bored, or using the shopping as an outing. You will buy things you don't need or rarely use. Always make a complete list of what you want, shop just for those items, and if you think you truly need something, not on your list - put off purchasing the product for 10 days, more than likely you will end up not buying the item at all.
Shop online as many retailers offer exclusive discounts to online shoppers through promo codes, discounts etc.
Falling for the Sales Techniques
- Couple of tread carefully points under this heading.
- Do not be caught buying something you don't actually need. E.g. 50% off promotion or buy 2 and get 1 free.
- Unless the item is on your shopping list, think twice about it, you do not want to accumulate things you will not be able to use.
- If the salesman is pushy, walk away, if you genuinely want the item you can come back.
Suze Orman - To really Save - do this..
Buy now and Pay Later Schemes
This scheme is one of the worst and therefore, a huge money eater. This where you are convinced to buy that car, you pay it off over five years and once you have paid it off, the car is worn out, and you have to buy a new one.
So you pay now, you pay later and you keep paying later for that car. The car has cost you more than 50% over its true value as you have been paying interest and additional car insurance, every month for as long as it took you to pay off the loan.
If you work for yourself, it will be better to save and buy the car for cash. Admittedly it may not be a new model, but providing you look for a vehicle which provides long term reliability, such as the Toyota Lexus, which you could safely take a four year old model that had one driver and was well looked after.
You could probably save in the area of $255 per month in auto insurance and interest. This provides a saving of $3060 per year which can be invested in either your own business or put into your savings account.
In fact, you would have to earn $450 to cover taxes, gas, commute time and other work expenses to clear the amount of $255.00. So you will be investing say $15 300 over a five year period using only the money you have saved by not borrowing!
Not Checking for Cheaper Deals
Check to see if your mortgage, electricity and gas supplier, cell phone and phone provider are charging you a fair market price, or are they taking advantage of your loyalty by charging higher prices.
The cost of internet service, cable and telephone, could be cheaper if you take up one of the discounts offered when these three are bundled.
Prepaid cell plans are cheaper, but this is not always right for everyone. Most stores leave wiggle room on their prices, so ask for a better deal.
Yes, the world is making you poorer, but avoid a negative attitude and see what you can do differently to move forward and improve your financial situation.
Not Tracking your Spending
It is imperative you know your true financial position, ignoring the problem will not make it go away. Awareness of your situation is essential to moving forward.
Delayed or missing payments on your credit card or loan will cost you in terms of penalties and interest, it also affects your credit rating, which in turn makes it more difficult and costly to get credit in the future. Rather set up debit orders to avoid this pitfall.
No Savings Plan in Place
Start saving in your 20's even though you have student loans to pay off, it is the habit that counts. If you put it off, you eventually find yourself in your 50's without savings nor a contingency plan.
Top Money Mistakes - Grant Cardone
Chase only Wealth Accumulation
Don't let money and wealth be your goal to the exclusion of all else. You need to maintain a sense of balance between wealth and the rest of your life.
Borrow at High Interest Rates
If you do have unavoidable debt, move it to the lowest possible interest loan, which may be your mortgage. Avoid borrowing at interest rates of 17% and higher on credit cards. Reward credit cards also carry a higher interest rate, around 2%, than non-rewards cards.
Overspending on Mortgages
The mortgage, something you will never finish paying off entirely as property taxes are never-ending. The bank asks for your W-2 and will lend you money as long as you are employed, so to repay that mortgage, you will be working for the next 25 years.
I would recommend working out what you will pay in interest over the years, as against renting accommodation and putting the money you have saved in a secure investment portfolio.
Financial advisors think buyers should spend about 25% - 33.3% of your income on housing. If you have student loans, child care payments or other large debt, that is too much. 18% - 25% is more manageable.
Only Earning from One Source
Try to earn from various sources will increase your financial stability. Freelance work, writing for Hubpages, or a money-making web page.
Try to Beat the Market
Rather invest a little bit at a time regardless of the market's behavior. You would need a time machine in order to beat the market, so rather ensure your investments are well-diversified, then you need not worry about Dow ups and downs.
Counting on Social Security
Today's 30 year old will start thinking about retirement in 2038 around the time Social Security is expected to run dry. If nothing changes, benefits will shrink to about 25% of what they are at present. Young people need to plan on funding the bulk of their retirement monies themselves.
Not Checking Insurance Options
Every year you should check that you are appropriately covered, from disability, to auto insurance. Ensure you are covered, and retain the best cover for your buck.
Buying everything New
Purchasing New Items that do not have a long Desirability Factor. It is not necessary to buy new DVD's, books, games, or children's toys. They do not have a sustaining interest factor, and you can pick up good quality items for less than half the price..
Other things that should be bought second hand are maternity clothes, musical instruments, power tools or craft supplies, large recreational items.
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