Ask any person and they’ll tell you that the best way to get something imprinted on your brains is by making big fat mistakes. After all how else will we learn, right? But when it comes to making mistakes financially, you should tread very lightly. If you make a mistake financially you might end up losing most of your savings. You need to be very careful where and how you spend your money.
Here is a list of the top 7 most common financial mistakes that we make:
- Excessive Spending:It is important to remember that every penny counts. You might take it lightly when you order the costliest food on the menu, or when you spend on that ridiculously expensive dress which might never see the light of the day. You might think that such expenses once in a while might not make much of a difference. But it makes a lot of difference in the long term. Instead of spending money on such unnecessary expense, you can use the money to make the next mortgage payment.
- Using credit cards:Having a credit card to pay for the essential stuff in life is agreeable. But what about the time when you use your credit card to pay for the stuff you might not actually need? Using a credit card to pay for stuff increases the original price of the item. Depending on the credit card will make you spend much more than you actually earn. and then you decide to pay off your credit card debt using your savings, which is not a good idea. if you ever stuck in this kind of situation the best solution is taking a Personal Loan to clear out all of your debts.
- Monthly payments:Before buying new stuff that you might need to pay EMI for, think if you will actually need it. There is no point in buying stuffs if you are going to end up broke after paying for it every month. When the money is really tight and you need to save some money, living a simple life can help you a lot.
- Using credit cards:Having a credit card to pay for the essential stuff in life is agreeable. But what about the time when you use your credit card to pay for the stuff you might not actually need? Using a credit card to pay for stuff increases the original price of the item. Depending on the credit card will make you spend much more than you actually earn. and then you decide to pay off your credit card debt using your savings, which is not a good idea. if you ever stuck in this kind of situation the best solution is taking a Personal Loan to clear out all of your debts.
- Purchasing a new vehicle:A lot of new vehicles are made and sold across the world but only a few people can actually pay for vehicles in cash. Many people think that having an EMI option means they have an ability to afford the vehicle. When in reality, the inability to pay cash for the new vehicle means you cannot actually afford the vehicle. By borrowing the money for purchasing a new vehicle, you pay interest on the borrowed money, which means the money that you pay is more than the actual money of the car.
- Overspending on the house:When you are thinking of buying a new property, always keep in mind to look for a house that fits your needs. The bigger property you want to buy, the bigger the price you’ll have to pay for the same. After paying the price of the house you have to spend more money to decorate or renovate your house. If you are not financially healthy, you might end up taking a home loan or Personal Loan for the house improvement. But do you think it is wise to spend a huge part of your monthly income in EMIs if your current accommodations suffice your needs?
- Using your house for money:Refinancing your home loan can mean that the ownership of your house can to the one who is giving you a loan. It will cost you a lot of money in interests and fees. In the end, you might pay more than the actual amount of the house.
- Relying on your monthly income:The growing result of overspending puts people in a very dangerous position. The combination of needing every dime that you find and a missed paycheck will only make up for a disastrous combination. Whenever you are spending money on anything make sure you actually have the financial health to pay for it. It is necessary to do financial planning before making decisions and evaluating your financial health.
