Managing your finances is one of the hardest endeavors associated with being an adult. And since this very important aspect of life is seldom explained to us, most adults tend to make mistakes when managing their budgets. The issue arises when these mistakes are so big they could potentially ruin us financially.
Given this, we would like to present you with a list we have compiled of the top most common and potentially devastating financial blunders. Read below to find out what you have been doing wrong and see what you can do to avoid such mistakes. Let’s take a look at the countdown.
No. 5: Overlooking additional income sources
Regardless of how well paid your current job, never underestimate the value of an additional income source. Most of us have a skill or two we can capitalize on, such as freelance writing or photography, so why not take advantage? Your career may reward you handsomely, but in today’s economy, there is no such thing as a secure job so you have to make sure you have something to fall back on.
No. 4: Not getting an insurance
House insurance, car insurance, life insurance, and the list can go on and on. While these may seem like expenses rather than investments, insurances can prove to be invaluable assets. Should the unimaginable occur, you’ll have a lifeline to resort to, rather than borrowing money left and right or using your savings.
No. 3: Paying off your debt using your savings
While initially it might seem like a good idea to use your savings account to pay off debts, this initiative can very well ruin you in the long run. An instant pay off your debt is a short-term solution, but the truth of the matter is that it won’t do anything to change the habits that indebted you in the first place. So you might find yourself once again in debt in just a few years time. The only difference will be that you won’t have any money set aside to save you again. Instead of looking for a quick remedy, you’d be better off trying to correct your spending habits and pay your debt slowly and steady.
No. 2: Not keeping track of your expenses
This might not seem like a major faux pas, but think of it like this: if you don’t know where and how you spend your money, how can you realize if you’re living above your means or not? Keeping a log of your expenses doesn’t take more than a few minutes a day, but it can help you a whole lot in the long run. Tracking your spending habits is the easiest way of ensuring you don’t break your budget and can help prevent you going into debt.
No. 1: Not putting money aside
This is by far the most common financial mistake people make. Whether they dismiss the importance of a savings account or they don’t set up a retirement fund, people don’t realize how vital it is to have some money saved up. You might have a great cash flow at the moment, but you never know what the future holds. So, if you haven’t thought about saving money until now, it is high time you considered it.
