Money-Mistakes to Avoid: Your Finance made easy
Don’t be surprised if you make some of your worst money-mistakes in your teens and twenties because financial decision-making is a skill that you develop over time. Anybody, even the most timid of hearts, may learn how to avoid money-mistakes
The key is to develop wise financial practises that, with time, should (ideally), result in a sizable savings cushion in your bank account.
However, in order to avoid money-mistakes, you must be aware of the most typical monetary errors and how to prevent them so that you don’t fail at the first obstacle.
Not having a budget is a money-mistakes
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Unplanned expenditure is a very typical mistake in money management.
The modest, hidden indulgences frequently empty our bank coffers. These can include spending a lot of money on a gym membership, going out frequently, or taking unnecessary cab rides (although this discount code or this one can help).
These purchases might occasionally be acceptable. The issue arises, though, when they start to creep into your routine and don’t fit into your monthly spending plan.
At first, it may be difficult to determine when and how to stop spending money. But following a budget of your monthly costs will enable you to monitor your expenditure and spot any careless spending.
No side income: big money-mistakes
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More than just your bank account, finding a side job or other source of money is essential.
By having a little more cash, you can get closer to achieving your long-term financial goals. It also ensures you have the extra cash to treat yourself when you succeed.
Don’t make the mistake of thinking that having a second job is only good for your bank account. A successful side business will impress potential employers and is a great way to boost your career prospects.
Every little helps, as our dear buddy Tesco would say, whether it be by pet sitting, starting your own company, selling pictures online, or other forms of passive income!
Credit card bill you can’t pay: a money mistake we all do
Using your credit card as “free money” instead of merely using what you have is a one-way route to financial ruin.
Use your credit card the same way you would a debit card if you have one.
Think about getting a new iPhone? Instead of charging something right away and hoping to pay it off later, only charge something to your credit card if you are confident that you have enough money in your student account to pay for it in full right immediately.
The same goes for using buy now, pay later services like Klarna: just make purchases if you want to spend more than you can afford.
Don’t withdraw can on your credit card to avoid money-mistakes
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If you ever receive a credit card, never use it to withdraw money from an ATM. Cash withdrawals made with a credit card are noted on your credit report and may appear to be reckless spending. If a bank notices that you have been using your credit card to make cash withdrawals later on when you apply for a mortgage, they can be concerned about how you handle your finances. It can appear like you are using your credit card to pay for necessities of life. They can conclude that you aren’t financially stable enough to take out a loan as a result.
Not negotiating salary of your job: money mistakes which ruins your income
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Not negotiating your wage before beginning a new job is another costly error. For two reasons, pay negotiations are crucial. First and foremost, you need to make sure you have enough cash on hand to pay for necessities like food and rent right away. Second, discussing your pay establishes the tone for your interaction with your employer. You are undervaluing your labour and encouraging your employer to do the same if you enter the negotiation with an extremely low amount.
Lending money to friends when you can’t
Having a heart of gold helps you avoid one of the classic financial mistakes. Additionally, it’s one of the most typical financial errors you’ll make in your twenties. But you learn via experience. It’s definitely not a good idea to lend money to pals, especially if you already have to live modestly. It generates strange interpersonal dynamics where you’re constantly keeping track of their spending and wishing they’d pay you back every time they buy a beer. Additionally, it will certainly result in the awkward situation where you have to request a refund. Best option is Keep your money to yourself if you’re already having trouble making ends meet.
Not having emergency fund: money-mistakes that can cost you
A fund for emergencies is required. Without one, you can end yourself relying on short-term solutions that you’ll regret in a few years. Any deficiencies, such as missed student loan payments or unanticipated phone problems necessitating the purchase of a new phone, must be covered by this sum of money. After graduating from college, if you find yourself unemployed and without a source of income for a few months, having some money set up for a rainy day could be quite beneficial. There are various ways to make money if you’re unemployed. To be prepared for tough times, it never hurts to have some money saved up.
Having subscriptions you don’t use: money-mistakes to avoid
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Utilizing your newly acquired financial knowledge, review your spending to determine if you are still paying for any subscriptions to services (such as streaming websites, for example) that you no longer use. Free trials are a great way to save money, but we’re all guilty of forgetting to end our memberships before the trial period is up. Amazon is dependable when it comes to refunding unused Amazon Prime subscriptions that you might have forgotten to cancel from. However, you must contact them within a month of the initial funds being deducted from your account and without having spent any of it.
USEFUL LINKS:
- https://www.savethestudent.org/money/student-budgeting/common-money-mistakes.html
- https://www.cnbc.com/select/5-worst-money-mistakes-to-avoid/
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