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Avoid These 3 Common Financial Mistakes

Posted July 9, 2018 by Lewis R Humphries to Finance 1 0
This post was written by a EasyFinance.com Community member. The views expressed below may not reflect the views of EasyFinance.com.

If you feel like you're struggling to get your head above water when it comes to your finances, you may be making some serious mistakes with your money.

Unfortunately, it's all too easy to fall into bad habits. The good news is that being proactive and aware of common pitfalls can help you improve your financial situation. Here are some of the most common financial mistakes to avoid.

Excessive Spending

Are you accountable for every dollar you spend? While it's easy to track your bills and other major expenses, you might be spending a lot more than you realize on little purchases in between. How much do you spend on dining out, entertainment, clothing, gifts, and other “extras” each month? While you shouldn't have to cut out these purchases completely, cutting back can help you save money and avoid falling into debt.

Track all your purchases to figure out where your money is going. Then, create a detailed budget and stick to it. You'll be amazed at how much you can save for a rainy day when you're more disciplined about where your money goes.

Overspending on Housing

Calculate how much of your income goes toward housing costs. If your rent or mortgage accounts for more than a third of your earnings, you're spending too much on housing. This is a serious problem since it accounts for such a significant portion of your budget every month. If you have other major expenses like childcare costs or student loan debt, you should really be spending less than one-third of your income on where you live.

If you're overspending on housing, it's time to downsize or move to a location where housing is more affordable. The other alternative is to increase your income, so if you really want to stay put, consider finding a way to earn extra income from a side hustle or look for a new full-time position with a higher salary.

Ignoring Debts

One serious financial burden that must be addressed as soon as possible is debt. You can't move forward financially until you deal with your creditors. Whether it's from credit cards, student loans, or buying a new car, your debts need to be paid back on time in order to keep your credit score from plummeting.

If you hope to get away with missing payments on months where you're short on cash, you're in for a rude awakening. Creditors can get a court order for a bank levy and collect money you owe directly from your bank accounts. If you want to avoid a bank levy, you have to file a dispute and work out an agreement with your creditors. Stay on top of your debt payments and make them a priority to avoid having your wages garnished or filing for bankruptcy. If you are dealing with a bank levy, hire a tax professional or attorney to help you get a better outcome.

Ready to get your financial house in order? Use these tips to avoid some of the common mistakes people make with their money. If you've applied them all and you still feel like your financial life is out of control, engage the services of a qualified professional to help you make the most of every dollar you bring home.

About Lewis R Humphries: Lewis is a financial blogger and researcher from the UK, with a passion for saving and personal finance.

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