Advertising
Advertising

10 Common Money Mistakes You Probably Make That Can Ruin Your Finances

10 Common Money Mistakes You Probably Make That Can Ruin Your Finances

Personal finance is easier said than done. Common money mistakes are made all the time, and they might even ruin your finances. Here are 10 common money mistakes that you may be making.

1. Underestimating your insurance needs and not getting enough.

Insurance is very important, and there is probably a good reason for why you may need it: health insurance, life insurance, car insurance, home insurance‒you name it. You need to value the savings that you are getting and weigh them against how much insurance that you actually need.

Advertising

2. Not saving enough.

Not saving enough is another common money mistake that you may be making. You should always strive to spend less money than you earn, it would be impossible to save if that was not the case.

3. Not paying your mortgage on time.

You should always try to pay your mortgage on time. Yes, something may come up which might mean that you don’t have enough cash to pay your mortgage that month. However, this is why it is always important to have an emergency fund.

Advertising

4. Ignoring your partner’s bad money behaviors.

If you have a partner, then I’m going to guess that their finances and money behaviors at least somewhat affect you, whether you have joint or somewhat separate finances. You should try to be on the same page, or at least in the same book.

5. Carrying a balance on your credit cards.

Carrying a balance on your credit cards is a big money mistake that many people make. You don’t want to do this. If you have a balance on your credit cards, it means you are paying high interest charges on your credit card, which means you are paying more than you have to for the things you are purchasing.

Advertising

6. Lending other people money, or cosigning on a loan.

Lending others money or cosigning on a loan is not often a good idea. You do not want to be stuck in the middle and lose money, so it is usually best to not let money get between you and a relationship.

7. Going without a budget.

No matter how much money you make, you will probably need a budget. If you make $100,000 a year but spend $95,000, are you really any better at finances than someone who makes $20,000 but spends $15,000? A budget can help you control your spending and show you where you need to make improvements. A budget can help a person think about their money a little bit harder so that they can reach their financial goals.

Advertising

8. Not caring about what you say in public.

You are probably wondering how this can be a common money mistake. Well, you might over-share on social media websites such as Facebook or Twitter.  Something like sharing an unprofessional picture of yourself could prevent you from getting the job that you want

9. Not having a plan.

You might think that you don’t need a plan, but most people need at least some kind of a plan. You need to think about your goals in life, and actively work towards achieving your goals. For example, it is extremely important for you to have some sort of retirement plan. Do you want to retire early? Or are you interested in paying off a certain amount of debt this year? Make a plan so that you can achieve these goals.

10. Not paying attention to your credit score as much as you should.

Even if you like to think that your credit score is not important, there are many cases in which a good credit score is better than a bad credit score. A good credit score may mean that you can get a better interest rate and maybe save hundreds on dollars each month in interest charges. A bad credit score may mean that you are completely denied for the loan that you want.

More by this author

6 Things Highly Effective Leaders Do Differently 30 Things You Need to Try at Least Once While You’re in Your 20s 10 Things Successful People Do Differently To Reach Their Dreams 7 Ways To Manage Emails So They Don’t Eat Up Your Time 4 Steps to Find Meaningful Work For Yourself

Trending in Money

1 How to Use Credit Cards While Staying Out of Debt 2 How to Use Debt Snowball to Get out from a Financial Avalanche 3 How Personal Finance Software Helps You Get More Out of Your Money 4 The Best Ways to Save Money Even Impulsive Spenders Can Get Behind 5 How to Answer the Tough Question: What are Your Salary Requirements?

Read Next

Advertising
Advertising
Advertising

Last Updated on March 4, 2019

How to Use Credit Cards While Staying Out of Debt

How to Use Credit Cards While Staying Out of Debt

Many people will suggest that the best thing to do with your credit cards during these tough economic times is to cut them up with a pair of scissors. Indeed, if you are already in huge debt, you probably should stop using them and begin a payback strategy immediately. However, if you are not currently in trouble with your credit cards, there are wise ways to use them.

I happen to really love my credit cards so I will share with you my approach to how I use mine without getting into deep financial trouble.

Ever since about 1983 when I got my first Visa card, I continue to charge as many of my purchases as possible on credit. Everything from gas, groceries and monthly payments for services like my cable and home security monitoring are charged on credit. Despite my heavy usage, I have maintained the joy of never paying any interest fees at all on any of my credit cards.

Advertising

Here are some tips on how best to use your credit cards without falling into the trap of paying those nasty double-digit interest fees.

Do Not Treat Credit Cards as Your Funding Sources

Too many people treat their credit cards as funding sources for major purchases. Do not do this if you want to stay out of trouble. I use my credit cards as convenient financial instruments so I do not have to carry around much cash. In fact, I hate carrying cash, especially coins. When you buy things on credit, the purchases are clean and you will not get annoying coins back as change.

I do not rely on my Visa, MasterCard or American Express to fund any of my purchases, large or small. This brings me to my golden rule when it comes to whether I will pull out any of my credit cards either at a retail or online store.

Advertising

I never purchase anything with my credit cards if I do not have the actual cash on hand in my bank account.

If I really cannot pay for the item or service with cash that I already have at the bank, then I simply will not make the purchase. Remember, my credit cards are not used as funding sources. They are just convenient alternatives to actual cash in my pocket.

Make Sure to Always Pay Off Balances in Full Each Month

The next very important part of my overall strategy is to make absolutely sure that I pay the balances in full each and every month no matter how large they are. This should never be a problem if the cash has been budgeted for my purchases and secured in the bank. I have always paid my full balances each month ever since my very first credit card and this is why I never pay interest charges.

Advertising

Using Credit Cards with Rewards

Most of my credit cards are of the “no annual fees” type, including one MasterCard on a separate account I keep at home as a spare in case I lose my wallet or incur any fraudulent charges. However, I do use a main Visa card which does have an annual fee because all purchases on that card reward me with airline frequent flyer points. For me, the annual fee is worth it since I do travel and I get enough points to redeem many free flights.

You have to decide for yourself if you will charge enough purchases on credit each year without paying interest charges to warrant a credit card that rewards you with airline points (or other rewards). In my case, the answer is “yes” but that might not be the case for you.

I occasionally use a MasterCard or American Express card on small purchases just to keep those accounts active. Also, I have been to the odd retailer that accepted only a certain type of credit card, so I find that having one from each major company is quite handy. Aside from my main Visa card which earns the airline points, the rest of my cards are of the “no annual fees” variety.

Advertising

So this is how I use my credit cards without getting into any financial trouble with them. This strategy is recommended only if you are not in debt, of course. In fact, it is worth keeping in mind once you’re out of debt so that you can keep your credit cards active and treat them responsibly.

What are your credit card usage strategies? Let me know in the comments — I’d love to hear what methods you use.

Featured photo credit: Artem Bali via unsplash.com

Read Next