The way your finances look right now is a combination of every single financial decision you've made in the past. And if you're like the most, you had no or little coaching when it comes to managing money. This means you could’ve easily made a mistake that will leave you with a big minus on your bank account without even knowing it. Having this in mind, let's take a look at some of the most common financial mistakes you can make and how to deal with them.
Spending a few additional bucks may not seem too much when ordering a pay-per-view movie or buying that expensive double-mocha cappuccino. Still, it's very important to know that every little item adds up and has a huge impact on your overall budget. Take a look at it this way - if you manage to save $25 per week, you'll be looking into extra $1300 on yearly basis. This means that passing on just one expensive dinner and a cup of coffee every week can help you pay off an entire car payment.
Not Having an Emergency Fund
If you think an emergency can't happen to you and that there's no need to have some extra savings just in case, you're making a huge mistake. A car accident or a loss of employment is something that can happen to anyone at any time. Therefore, having some money sit at your home or on a bank account you don't often use is always a good idea. Most of the financial planners say that having at least 3 months' worth of expenses just in case is an absolute must.
Another thing many people do is buying too many pieces of electronics that leave them with never-ending payments that can seriously disrupt their budget. Therefore, you should ask yourself do you really need that new flat screen TV that you will be paying for month after month during the entire year. Even though something like this may seem like a great idea at the time, when thinking long-term this is only a step backwards from cushioning your financial hardships.
Spending Too Much on Your Home
When buying a house, there's really no need to go for a 6,000-square-foot one if you don't have a large family. Some people like the idea of having some extra space in their home but bear in mind that this increases their taxes, maintenance, and utility bills. So, when buying a new house, think about whether having some extra space really is worth putting such a long-term dent on your budget. Also, if there's too much empty space in your current home, you can always think about moving to a smaller house where your monthly expenditures will be lower.
Loaning Too Much Money to Your Business
Many entrepreneurs choose to use their personal money to finance their business. Now, this can sometimes be a good idea but if you overdo it, you can easily end up not having enough money in case of an emergency of your own. Not to mention that if you put a personal asset at stake, there’s always a chance of losing it in case. That’s why getting a business loan is always a better idea. Luckily, companies such as ALC Commercial offer quick business loans, which means there’s no need to invest your personal money even if your business needs a quick cash injection.
The bottom line is, you don’t need a certification in economics in order to manage your money in the right way. Just be careful when adding new debts to your current list of payments and make sure there’s always some money on the side just in case.