When it comes to managing your finances, there are a few crucial mistakes that absolutely need to be avoided. In this article, we will discuss the four biggest money mistakes that people make to prevent you from making any of them yourself.
There are four money mistakes that people often make.
1. Not knowing how much money is coming in versus going out
Probably the biggest mistake you can make when it comes to money management is not to know how much you are spending versus how much you are making. If you don’t keep an eye on your cash inflows and outflows you can easily find yourself overspending every month, which is a direct route to finding yourself in a heap of debt further down the road.
It is vital to keep an eye on your inflows and outflows so that you spend within and not above your means. The best way to do that is by creating a monthly budget and sticking to it.
Avoid these money management mistakes
2. Neglecting your debt repayments
Another money mistake you definitely need to avoid is neglecting your debt repayments. Firstly, if you disregard your debt entirely and don’t make your monthly payments you can end up bankrupt very quickly as your creditors will seek to retrieve their funds. Secondly, if you are not making all your monthly repayments on time you can incur penalty fees or higher interest costs, which will add to the debt amounts you will need to repay.
Always make sure you are making all your debt repayments on time each month.
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3. Not comparing financial services providers for the best deals
A very common money management mistake is to choose the financial services providers that friends, family or, even worse, advertisers suggest. Instead, use comparison sites to find the best deals for financial services such as current accounts, insurance policies, mortgages, etc.
4. Disregarding retirement planning because you are "still young”
Another major money mistake you want to avoid is disregarding retirement planning because you feel that you are still young and retirement is so far away. While retirement may not be around the corner for you, the reality is that the sooner you start investing for retirement the better.
Whether you start to purchase investment properties, invest money in the stock market or assess your pension plan options with your employer, the sooner you start to plan for your later years the better.