Seven Things to Avoid When You Spend Your Money - Slimmer Payments

Seven Things to Avoid When You Spend Your Money

When times are uncertain and the future does not look so bright, it is a good idea to put away some money into savings. Being careful not to spend money needlessly can be very helpful if the economy goes south again. Here are seven things you want to avoid doing when you get paid.

1. Avoid Spending It All

One of the best ways to use your money is to save it. Designate some of it to go into a savings plan where you can tap into it at a later date when needed – and put some away for retirement. Financial advisors recommend saving as much as 30% of each paycheck if possible. If left alone to build, it could lead to a more comfortable retirement.

2. Avoid Not Having an Emergency Fund

Emergencies and unexpected financial surprises can happen at any time. Whether your car breaks down or you need sudden medical or dental care, it can be costly. When large debt is involved, it can lead to financial strain for a long time. Aim to save between six months to a year’s worth of income in your emergency fund.

3. Avoid Buying Frivolously

Purchases made on impulse can lead to keeping you in debt. It can easily cause you to overspend and keep you paying high-interest rates for years to come. Create a budget and seek to stay within it. Take a day or two to think about each large purchase you are tempted to make and ask yourself: “Is it really important to have it or do I really need the best?”

4. Avoid Keeping a Balance on Your Credit Cards

Keeping a balance on your credit cards causes you to spend more money than necessary. You are paying interest – probably high interest – on each one which only keeps you in debt longer. Paying them off as soon as possible will enable you to enjoy financial freedom sooner.

As an alternative to credit cards, pay with cash. This will give you greater control over your finances because you will only be able to spend money with the cash you are carrying in your wallet.

5. Avoid Paying Down Your Largest Credit Card First

Although you certainly want to pay the minimum amount due each month, you will be able to become debt-free sooner if you pay your smallest bill off first. Then, you can take that same amount of money and apply it to your next largest bill, etc.

6. Avoid Putting All Your Savings in One Basket

The best way to save money is to diversify your investments and savings. When one type of investment or savings program does not do well, other ones could make up the difference. Interest rates and stock market values change all the time – especially now during the pandemic.

Look at the interest rates and monthly costs before using savings plans. When looking for long term savings programs, consider bonds, CDs, mutual funds, and property investments. Invest in different asset classes, too, and avoid placing all your investment money into just one.

7. Avoid Get-Rich-Quick Schemes

Many schemes claim that they can make you rich. The truth is that few people get rich quickly, but it is possible. It can cost you a lot of money trying to find which scheme works best, but most will not work at all. It is better to try and get rich slowly and learn how to use your money wisely while in the process.

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