Common Money Mistakes That You Might Be Making

Money can be both a great resource to have as well as enough of a burden that a person could be financially crippled for the rest of their life. Being able to use money in a smart way is a life skill that many people don’t learn early enough, and it can leave them in debt for many years, and sometimes even decades.

It’s also becoming more difficult to maintain good money management in a world where wages have stagnated over the last few decades while the price of living has increased drastically. Here we will look at some of the more common money mistakes that all people make and how to avoid them.

Excessive Credit Card Spending

For those that are careful with their money, a credit card is an exceptionally useful tool that allows them to build a good credit rating while also having emergency money available if they need it. For many others, credit debt is truly crippling, and it’s often because they buy too much on their credit card. It’s important to always keep in mind that the money on a credit card does not belong to the spender, but to the bank, and it’s money that will always need to be paid back at one point or another.

Always Purchasing New Items

While it’s always nice to buy something brand new, it can also be financially difficult to cover the costs in the long-term. A good example of this is a car: buying a new car is appealing, but it’s always a much better idea to instead look for a second hand vehicle that’s in good shape.

Secondhand vehicles that a full service history and decent mileage are virtually no different from a new car, except for the fact that they are significantly cheaper. This rule can apply to many things, from smartphones to laptops and even to clothing. Buying second hand doesn’t mean that a person is too strict with their money, but rather that they are able to recognise the value in specific items that are just as good second hand.

Not Having A Financial Plan

Many people, especially those that are still quite young, don’t take the time to plan out their financial future. This involves creating and maintaining a budget, as well as setting a 5-year and 10-year plan. Without proper planning, large expenses can quickly become overwhelming, and debt can see the person being unable to save any of the money that they earn, as well as not being able to indulge in their favourite pastimes, such as playing on Budgets are extremely easy to put together and can help a consumer make their money go that much further.

Buying An Expensive House

Everyone wants to one day buy their dream home, but it’s also quite common for people to overspend when purchasing a home. This is usually because they buy houses that are larger than they can generally afford, and it doesn’t take long for them to realise that they are now in a financial bind. It’s a much better idea to instead aim for a smaller house that’s affordable, and then save up for something bigger down the line.