None of us are perfect, which means that we all make mistakes from time to time, and that includes with our money.
Financial mistakes are not uncommon, but they can have devastating consequences for us and our families if they leave us in a financially precarious situation, which is why it is definitely worth taking a look at some of the most common money mistakes we make so that we can avoid them and have a healthier financial life overall…
Not building an emergency fund
An emergency fund is an amount of money that you have saved aside to cover… well emergencies; things like the car breaking down or the dog getting sick, which might otherwise throw your finances seriously out of whack and leave you in need of credit to get by.
Most people think that an emergency fund that is equal to at least 6 months’ salary is ideal as that will give you more breathing space should you become unemployed or have other financial difficulties, but saving as much as you can, will certainly help. Finding a trustworthy bank such as Evolve Bank & Trust is also a good idea; the experts will be able to offer savings advice and a safe place to keep your emergency fund.
If you have any surplus cash after the bills have been paid, you should be investing at least some of it. Why? Because investments are, generally speaking, the best way to build your wealth over time. If you have never invested before, companies like M&R Capital Management can help to build and manage a portfolio for you so it does not have to be too difficult, and you can choose a level of risk you are happy with. Just make sure you do invest if you are serious about building financial security now and in the future.
Not paying down high-interest debt first
So many people will start paying any spare money they have off their mortgage when things like credit card debt, student loans, and auto payments are charging them way more interest. It is usually far smarter to pay off high-interest debts first because they are costing you more money. Then, when you have cleared them, you can start paying down the mortgage or other low APR debts. This is usually the smarter use of your money that will enable you to get the most value, but it is always worth checking interest rates first, of course.
Not taking advantage of employer match programs
If your employer is offering to match your 401(k) contributions and you do not take advantage of this, you could be selling your financial future short; you could be missing out on tens of thousands of dollars of effectively free money that could secure our financial future and make life easier for you as you get older. Don’t let that happen, and make those contributions so you can take advantage of the match schemes whenever you can.
If you can avoid making these common financial mistakes, then you are likely to have an easier time of it when it comes to money management and all things financial, which is never a bad position to be in!
Be safe out there.
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