It is quite important to manage your money in the 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 if you are in a tough time or in the 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 losing a small amount of money at a time. Sometimes it does not look big when you are spending for 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 that every small thing adds up quickly. For example, spending INR 200 per week for watching movies can cost you INR 10.4K per year, that you can use to paying 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 than a little 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 are worth paying. These monthly payments compel you to pay for these things without taking many benefits?
At a tough time or during the hard financial time you need to focus on saving more money by any means. If you are able to create a simple lifestyle you can go long way helping in your way to save money.
By doing so you can escape yourself 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 the 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 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 your earn by using a credit card.
#4. Buying New Car
A great number of cars 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 pay interest on the amount paid for the car is way higher then it could be ever sold on that price.
In a few case, 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 bought 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 cost, taxes, utility bills, and maintenance costs, etc. Sometimes buying a home through loans can heart you more in form of monthly bills.