Keeping on top of your finances is one of the important things in a person’s life. Of course, we all make mistakes, but some mistakes when it comes to finance are worse than others. This article will take a look at 5 of the worst financial mistakes you can make.
1. Abusing Credit Cards
Credit cards are a fantastic tool when used intelligently. When used cautiously and paid off in full every month, credit cards can be a great disciplinary tool and can help your credit score skyrocket as your credit score is partly based on your credit card usage. Just because you have a sky high credit limit for your cards shouldn’t give you the right to spend it all, every month. Credit card debt is one of the most common in the world and can be very tough to get rid of.
2. High Interest/Questionable Loans
While taking out loans in life is almost a guarantee, there are definitely some loans you want to avoid. While a majority of loans from banks and other institutions are normally decent and not ridiculous, some can be sneaky and can put borrowers in serious trouble. For example, some payday loans can have ridiculous APR’s of over 400% and auto title loans actually use your car as collateral if you default. Always know the fine print of any loan you plan on getting.
3. Not Saving Enough
This entry isn’t for everyone. There do exist those people out there that literally need to put the entirety of their paycheck towards essentials, but, for the large majority of people, they simply spend too much on things they don’t need and don’t save enough. Getting in a good savings habit can be huge not only for the short term future but also long term and retirement. Treating yourself now and then is fine, but don’t forget to save as well, because you never know what unfortunate surprises may come up and you want to be prepared.
4. Not Taking Advantage of Company Match
This one, again, isn’t for everyone. But, if you work for a decently sized company, chances are they have an investment matching program. If you invest in a company 401k, it is likely that they will provide you with a “match” of a certain amount, let’s say 5%. This means if you invest 5% into that program, they will match your contribution, which is basically free money. Definitely do some investigating and see if your company offers something like this, as it is one of the easiest and best ways to stay on top of your finances.
5. Not Having Some Sort of a Budget
Budgeting is a major key; there is no way around it. It is unlikely that you will be able to keep on top of your finances if you do not track how much you’re have coming in each month, and how much is going out (and where it is going). There are a ton of programs out there to help with budgeting, while other prefer a simple pen and paper to track their spending. It doesn’t matter how you do it, but make sure to keep an updated and accurate budget, your future self will thank you.