Are you making any of these mistakes?
Not everyone lives in a house where personal finance tips constitute nighttime conversations. Reaching retirement age and not having anything in savings can be the result of financial mistakes made when younger. When money mistakes are made, it can take a long time to recover from it.
Avoiding mistakes can lead to a richer and more satisfying life – and a better retirement. Some money mistakes are common but these should be avoided:
Carrying a Balance on Credit Cards
Credit cards usually have a two-digit interest rate. You can avoid paying interest on a credit card by paying the entire bill each month. A lot of money is lost if you leave a balance on it each month.
Even a deal will cost you more after you add months of interest to it. You can save a lot of money annually if you pay down the credit card debt as fast as you can and then use cash for your purchases – or be sure to pay it off completely each month.
Not Having a Financial Budget
Have a budget that is based on your income. This allows you to manage your money more efficiently. You will be able to see where the money goes each month and where you are wasting money. Set limits on each category and then stick to it as much as possible.
Put some money aside for an emergency fund and then the rest in savings.
Payments That Never End
Although paying for some services may not be completely avoidable, look over the services you pay for and see if you can eliminate some or all of them. This includes services such as cable TV, membership at a local gym or spa, magazine subscriptions, etc. In other cases, such as TV and Internet services, getting a reduced plan can also help save some money.
Not Having a Plan to Pay off Debt
Take a serious look at your debt – along with the interest rates. This will show you why you need to do something about it. Living perpetually with a lot of debt is not a good way to enjoy life. It means that a lot of your hard-earned money is being used to pay interest – possibly with an average of about 19%, and some of it is for things you are not able to use anymore.
Committing to paying off your debt one bill at a time will enable you to have more cash each month and less stress. There is more than one way to do this, but one way is to start with the smallest debt and pay it off first, then use the same amount of money and add it toward the regular payment of the next bill until they are all paid. It also means not charging any new debt until it is all paid.
For a great tool to figure out how long it will take to get out of debt, take a look at this Debt Payoff Calculator.
The MOST IMPORTANT PERSONAL FINANCE TIP: You Are Not Saving Any Money
It is easy to spend money and harder to save it. Without a plan of some kind, your savings toward that special event or retirement will be minimal and will take longer to reach a realistic goal.
Make a commitment to save some of your money each month – aim to save at least 10 percent or more of your income. Then put it into an interest-bearing account, or consider investing it in the stock market to earn even more interest.
If these personal finance tips were not enough to convince you to start saving, take a look at our last article, where we discuss how not having cash on hand can end up costing you BIG.