Most of us spend a bit too much money here and there. But some have trouble keeping themselves from debt. These often-overlooked common financial mistakes can lead people down the path of economic struggles. Some of these blunders could be something you are committing right now. Read on to steer clear of these costly mistakes.
1. Unnecessary and frivolous spending
These are the kinds of expenses that most people do not notice in their budget. A Starbucks cappuccino here and a dinner out there may not seem like a big deal but every little expense adds up. If you add up your expenses at the end of the week, you would be surprised by how much the total amount would be. If you dine out just once every week spending $30, that would set you back $1,560 a year. That amount could go a long way in other more important payments. If you find yourself having economic troubles, recognizing and correcting this mistake is vital to keep you financially afloat as you are pretty much a dollar away from going bankrupt.
2. Purchasing a new car
Buying a new car is one of the monumental joys in life for most people. Many people dream of finally buying that shiny new car. It is pretty, has that new car smell, and it is brand new! However, it is quite a bad investment from a financial perspective. When purchasing a new car, you are paying full price for something that depreciates 20-30% of its full value in the first year and an additional 15-18% in the year following that. Not only are you paying a huge amount but you are also paying that original price for something that loses value so rapidly. This is a poor investment compared to other typical big purchases. Buying a used car in a good condition is much wiser in the long run.
3. Not being wise when using credit cards
Credit cards can easily be a bad thing or a good thing and this just depends on how you use them. Since a lot of people in most developed countries use credit cards even for small daily purchases, it is important to choose which credit cards have the best interest rates. Getting a credit card with high-interest rates makes the items purchased on it much more expensive. Sometimes, using credit may also cause you to go beyond your budget as paying for anything using the card feels psychologically lighter than paying with cash. However, if you use it properly, a credit card can offer great deals and perks when you regularly use it.
4. Not tracking expenses
It is surprising how many people do not plan out and organize something as important as expenses. People like to spend a lot of hours just watching TV, using their phones but would not even set aside an hour to manage their expenses. Your financial situation in the future will depend on how well you organize your finances right now. Prioritize planning out your finances as this is a very productive use of your free time.
5. Not Investing
Investing money is not comfortable for a lot of people. It can be because the concept of investing might be a bit too difficult to understand for most people who do not have a financial or stock market background or investing might be too unstable and most people are uncomfortable with instability. Earning a stable income and saving money is much simpler. However, letting your money sit untouched is losing it to inflation. By making your money work for you, you have another income stream, and that staves off the depreciating effects of inflation.
CM Tribe Does Financial Content Marketing
Financial literacy is more important than ever, and CM Tribe is committed to bridging that gap. As your trusted content marketing tribe, we aim to tackle issues around finance and investment education so you don’t end up looking confused when those industry jargon are thrown around. Learn more about financial content marketing with CM Tribe today!
Get started today by calling +(632) 8256 8084 or reach us through our contact form.