burning money

photo by purpleslog

You've probably made a financial mistake or two. Some money mistakes are fairly common. Most people learn from them and make changes for the better. Consistent decisions (both large and small) can have a big impact on your financial future. If you're starting out, you'll be ahead of the game if you make the best choices and avoid common money mistakes. But it's never too late to get to back on track and make corrections.
Here's how to avoid a few common pitfalls.

IMPULSE BUYING: OK, sometimes there's a purchase you simply don't want to pass up. But often, making impulsive purchases works against you. Be an educated consumer so you don't waste your hard-earned money. When possible, delay buying. Wait at least 24 hours for larger-ticket items and a few hours for anything that costs less than $100. This will give you time to research items, weigh out your options, comparison shop, or decide whether you can live without it. Sometimes your interest fades quickly.

LENDING MONEY: Don't do it. Make it a personal policy.

TIME IS MONEY: We're all trying to save time. There are many products and services available to help you do this. But many of these items are shaving only a few minutes of your time and costing too much money. That's money that could go toward something else, such as debt or savings. Bagged salads, pre-chopped fruits and vegetables, shredded cheese and premade sandwiches come to mind. Evaluate your timesaving decisions.

BLISSFUL IGNORANCE: Create a budget. Track where your money is going. Monitor rebates, identify money leaks, and re-evaluate services such as gym memberships and media subscriptions such as cable-television packages. Do you use these services? If you're married, don't rely on your spouse's credit. Build or repair your own. Don't keep money secrets. And don't overlook checking your credit report annually. You need to know whether it's accurate.

DON'T OVEREXTEND YOURSELF: Take into consideration features you can live without when it comes to buying a home or vehicle. Do you really need two fireplaces and a pool or heated seats and mirrors? Don't buy the maximum home you're approved for. Situations often change, so don't assume hardship can't happen to you. Strive for your monthly debt obligations to be less than 36 percent of your gross monthly income. Learn to say no to your kids, too. Financial discipline is for all family members. Your finances come first. For example, your retirement trumps their college.

THE BARE MINIMUM: Show some effort. This applies to all areas of your life, such as your marriage (divorce is expensive), but especially when it comes to making minimum payments on credit cards and loans. If you carry a balance on your credit card in the thousands and continue to make minimum payments, you might not live to pay it off. Visit www.financialcalculators.com, and see how much you can save by making extra payments. Be sure to check your insurance policies, too. You don't want to be underinsured. Evaluate your deductibles, too. Your kitchen pantry should not be at the bare minimum, either. If you experience a job loss, you'll be happy you were prepared; and if you don't, you'll be pleased with the money you saved by stocking up during sales. Take care of yourself, too. You and your health shouldn't be last on the list.

NO 'I' IN TEAM: In a relationship, one person shouldn't handle all of the money. Budgeting is for both partners. Set financial goals together. Know what is going on with your money. Build your savings together. If you haven't already, make it a priority to establish an emergency fund.

You might also like Identify bad money habits