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Eight Money Mistakes Many People Make
There are several money mistakes that are common to the larger percentage of Americans especially the younger generation. This article throws light on eight common money mistakes that many Americans make.
1. LIVING WITHOUT A BUDGET
According to a Gallup poll, only one in three Americans make a budget. Majority of that fraction make bad and inaccurate budgets. It is a fact that a budget is essential to stay on track financially. A well planned budget helps you quickly repay your debts, refrain from overspending, grow your savings and limit unnecessary purchases to the barest minimum.
2. NOT EXPLORING LOAN FORGIVENESS
As at the year 2016, Americans owe $1.3trillion in student loan debts, spread out among some 43 million borrowers, to the extent that the average college graduate in the year 2016 has about $37,172 in student loan debt at the rate of six percent. Not only students are caught in the loan net, non-students and average Americans across all age groups also have severe loan burdens. What is however uncommon is the exploration of loan forgiveness. There are several loan forgiveness programs out there especially for the student loan category which includes, loan forgiveness for volunteering, choosing a job in a certain field or moving to a particular location. Loan forgiveness programs are a great way to relieve oneself of loans.
3. NOT SAVING
According to a Capital One Survey, thirty-six percent of American youths especially college graduates admit to not saving on a consistent basis. Majority of this group only save to meet a particular target. Once the target is met, they discard the culture of saving only to embrace it again once they have another financial target in sight. Not saving is a bad idea at any age, making it a habit when you are young can delay your progress. Start saving whatever you can every month. If you are having problems with saving, then try using technology to help yourself save more. There are several ways technology can help you save.
4. NOT CONTRIBUTING TO A 401K OR RETIREMENT FUND
Aside your emergency fund savings, saving for retirement is important. According to a survey by Wells Fargo, fifty-one percent of millenials aren’t saving for retirement. The scenario is worst among graduates who just secured a job. The first thing they want to do is blow their money and enjoy life. It may seem that retirement is far away but the more you save, the longer the money will have to compound and grow. If your employer offers a 401K, take advantage of it, especially if they match a portion of your contribution.
According to a survey carried out by Moody’s Analytics, it was discovered that the people surveyed had a savings rate of -2%, which means that they are spending more than they earned. The habit of overspending is particularly popular among single young people. The best way not to overspend is to continue to live within or below your means. If you are a college graduate, then embrace some of the cheap habits you developed while you were in college. Learn to differentiate between your needs and wants. You definitely need to pay for food, gas and rent but you can live without a cable subscription or gym membership.
6. USING CREDIT CARDS TO FUND AN EXPENSIVE LIFESTYLE
With the popularity of telecommunication, consistently improved internet access and social media communication, knowledge travels fast. Many Americans are learning the technical intricacies of improving one’s credit score rapidly. The implication of this is that it is now easier to get approved for credit cards. The irony is however that many Americans turn this opportunity against themselves when they abuse credit cards. There are certain tricks that will ensure that you get a ninety percent chance of credit card approval but these tricks won’t help you repay the loan. Many Americans use credit cards to fund expensive lifestyles because the credit cards came easy. This habit is wasteful and ensures that the average American go further into the debt circle rather than move away from it.
7. PAYING UNNECESSARY BANK FEES
Another popular money mistake many people make is paying unnecessary bank fees. If there is one thing banks love, it is charging you extra for minor transactions and hoping you won’t notice. One notorious bank fee is debiting your checking accounts for simple transactions. On the otherhand, there are notorious bank fees that people voluntarily walk into. One of them is Overdraft fees. Others include credit card late payment fees, returned check fees, ATM fees, among others. These fees are avoidable, avoid them.
8. ONLY CONSIDERING THE UPSIDE OF INVESTMENTS
One of the money mistakes several Americans make is that they make investments while only thinking of the upside of their decisions. Many people lose their hard earned money this way. Several Americans never consider the downside of investments. Ensure that you are savvy about the type of investments you are about to make and consider all possibilities. There are multiple ways to invest your money. Do not bother to buy stocks if you know nothing about it.