Common Financial Mistakes You Can’t Afford To Make

Whether you admit it or not, money makes the world go around, which is why it’s so important that you manage yours well.

 

To be successful in managing your personal finances, all you really need to do is spend less than what you earn. Unfortunately, doing this is much easier said than done. We all make mistakes when it comes to our finances, and while many of these mistakes can be put right, some of them can’t be. Because of this, it’s better that you avoid these financial pitfalls altogether. With that in mind, here are five you need to watch out for.

How Much Do You Spend?

 

If you want to spend less than what you earn, then that’s exactly what you need to do. Living beyond your means is an incredibly common problem, but is one that can wreak havoc on your finances. There’s no point in trying to act more wealth than what you are or keep up with the Joneses, as this will only put you in more trouble. Instead, you need to make some cutbacks and find ways to earn yourself some extra money on the side.

 

Relationship Issues

 

No one likes to think of love and money at the same time, but you have to understand that relationship issues can seriously damage your financial health. Of course, a divorce is a costly experience, but so is marrying someone who likes to overspend. Because of this, it’s crucial that you discuss finances before you get married, to ensure that you and your partner are on the same page with spending. You might also want to consider a prenuptial agreement.

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What About Insurance?

 

Insurance is there to cover you financially and replace or repair assets if something were to go massively wrong. Because of this, it’s crucial that you have an adequate policy, or you could end up with much less cash than you need. Ensure that you research life, health, home, and auto insurance near you and find a policy that suits your needs. Just make sure that you don’t go overboard, as this can be just as financially damaging.

 

How Much Debt?

 

Most people have debt of one type or another, but it’s crucial that you don’t fall too deep into debt, as this can cause a lot of problems. If you’ve got into a financial mess, then you need to take action and do what you can to get yourself out of it. Start by assessing exactly what you owe, and then find ways to cut costs, earn extra cash, and start making payments. If you need help at any point, make sure that you get it. There’s no point in struggling alone.

 

What About Emergencies?

 

When faced with unavoidable and unexpected financial problems, your emergency fund should be your first line of defense. Unfortunately, if you don’t have one, you’re going to have to borrow, which means putting yourself in debt. Because of this, it’s important that you go over your budget and start to put some money aside. Try to get around six months worth of living expenses together and keep it somewhere safe, but easily accessible.

 

You Can Make Progress

 

Everyone makes mistakes now and then, but if you want to keep your money safe, then you should avoid making the ones listed above.

This post is for educational purposes only.

 

Ken Boyd

Author: Cost Accounting for Dummies, Accounting All-In-One for Dummies, The CPA Exam for Dummies and 1,001 Accounting Questions for Dummies

Co-Founder: accountinged.com

(email) ken@stltest.net

(website and blog) https://www.accountingaccidentally.com/

(you tube channel) kenboydstl

 

Image: Bullseye, Jeff Turner CC by 2.0