It is quite important to manage your money in a way you can use it for good.
In this article, we will discuss the very common mistakes people make frequently that can lead individuals towards difficult financial situations.
Suppose you are in a tough time or a financial crisis, by knowing these mistakes you can find a way to survive.
Top Most Common Financial Mistakes
#1. Excessive Spending (Spending on Something Not Necessary)
It is not good even lose a small amount of money at a time. Sometimes it does not look big when you are spending on things like buying a pack of cigarettes, going out for dinner, paying little for watching movies, and buying something else for little.
Remember one thing every small thing adds up quickly. For example, spending INR 200 per week to watch movies can cost you INR 10.4K per year, which you can use to pay your debt or invest that money.
If you are in a financial crisis you should avoid these things at all costs. If you are about to bankrupt then a small amount matters for you.
#2. Never-Ending Payments
When you are in critical financial situations you should ask yourself for some never-ending payments. Are these payments like music services, cable TV rental, or a Gold Star gym membership worth paying? These monthly payments compel you to pay for these things without taking many benefits.
At a tough time or during a hard financial time you need to focus on saving more money by any means. If you can create a simple lifestyle you can go a long way helping in your way to save money.
By doing so you can escape from the hard financial time and you might have enough money to enjoy your life.
#3. Depends on Borrowed Money
It is common to use a credit card to buy things for personal use and keep on paying monthly. Even today there are numerous people who all willing to pay a double-digit interest rate on a purchase and keep on using a credit card.
Many of us use credit cards to buy groceries and other things and store them for no reason before the bill is paid. When you use a credit card to buy things it makes the price of the product and services much more expensive.
It depends on you, sometimes you may spend more than you earn by using a credit card.
#4. Buying New Car
A great number of cars are sold each year, even though only a few people are able to pay the car price in cash. If you are unable to pay cash for cars directly simply means you are not able to buy that car.
Both are different things that you are able to afford the price or able to afford the car. When a consumer buys a car and pays interest the amount paid for the car is way higher than it could be ever sold at that price.
In a few cases, you might have no choice but to buy a car. In those conditions, it depends on your need, not just a car is available on the loan you should buy a top model or a big car.
We suggest buying a less expensive car if you have to buy a car on the loan amount. When you buy a car means you are spending your money that can be used to pay off your debt.
#5. Spending Too Much on Your Home
At the time of buying a home, it does not mean the bigger home will be always better. People tend to spend more and more while buying a home for themselves.
It makes sense to buy a bigger home if you have a big family. Buying a 6000 square feet home can increase buying costs, taxes, utility bills, maintenance costs, etc. Sometimes buying a home through loans can hurt you more in the form of monthly bills.