Many of us earns a decent money but they do not have the money as they earn. Perhaps there are many traps in their life they fall for it and lose money. Some people repeat this again and again and never take a lesson from the past action. They make some usual mistake repeatedly and not able to save money. We have listed few of the simple and common financial mistake done by people.
Always Purchasing New Car
Every year millions of new cars are sold, even the few of the buyers able to pay in cash. However, it can say that not able to pay the whole amount in cash for the car not able to afford a car. Anyway, it is not the same that not able to full amount of car not able to own a car. Next, the people who borrow money for buying a car paying the interest on a depreciating asset, which actually makes the difference between the actual price of the car and the amount paid for it. This is the bad situation many people buy a new car in every two to three years and lose money each time.
Sometimes it happened the persona doesn’t have another choice other than taking a loan to buy a car, but buying a large SUV can cost you more. However, if you are in need of a car than take the less expensive car so that you can save some money.
Spending Life on Borrowed Money
This is one of the big mistakes people often make. It is normal to buy essential using credit card these days. After all the numbers are increasing who all are willing to pay a double-digit interest rate on groceries and lots of another item which are not much necessary for them. Interest rate of a credit card makes the things more expensive than its actual cost. If you are dependent on the credit card this can lead to spending more than you earn.
Paying for Something Forever
You need to ask yourself for things you keep on paying for every month are really necessary for you. Services or things like music service, cable television, and fancy gym membership can force you to pay these unnecessary expenses and leave you with nothing. Make sure you created the simple lifestyle when the budget is tight this can help you with saving many dollars and you can come out of the personal finance crisis.
House expenses are Much Higher than Really It
should be
Sometimes people spend too much money on house. Suppose a small family buying 5000 sq. foot house will lead to more expenses and tax or maintenance cost, this is not necessary to buy a bigger house until don’t have a large family. It is not necessary to put these unnecessary extra expenses on your monthly budget.
Not using Your Money Properly
If the money you have invested not working for you in the market by other income producing investment, you should not stop working ever. Making a monthly contribution to your retirement or pension account can ensure smooth retirement. Take the advantage of tax benefits and employer-sponsored retirement plans. You need to understand the investment you have made will start growing at some certain time and how much risk you can tolerate. You need to consult with a certified financial advisor to match up with budget and invest in a better way.
Too Much Spending Habit
It is said that often one dollar lost by great fortunes. It might not seems to be a big deal when you spend for a cigarette or other small things and dinner out every week and going for movies but each little item adds up. Suppose just $25 per week is spent on going for dinner out cost you $1,300 per annum, this amount could go towards extra car payment and mortgage payment. For example, if anyone is about to bankruptcy than each and every dollar matters ever than before.
Don’t have future Planning
This is one of the common mistakes most of the people come across. Your future financial life depends on today’s work. Individual spend many hours while watching TV or scrolling through social media feed but keeping 2 hours for financial life in a week is out of the question. You need to understand the where are you at this time and where you need to move on. Spending a few hours planning for your finances is most important.
Trying to pay your Debt By using Savings
Some people might be thinking if their debt costing 18% and their retirement account making profit of 7% often they swapping the amount to pay the debt. But it is not simple to pay the retirement amount back. Due to compounding power, it is very hard to pay-back retirement funds and you can hit with heavy fees. When you pay your debt using the savings you have to live the life like still, you have to pay off the debt. So not spend you saving to pay the debt.
Final Word!
To keep yourself from out of overspending
problem start by monitoring the each and every little expense which adds up very
quickly. Think twice before putting new debt in your list, it does not mean you are able to pay debt than being able
to afford the purchase. At last but not
least start saving something that you
earn on monthly basis and spend some time on
making a plan for financial life.