Spending habits can usually get the better of us and leave us in dire situations. From not checking your account or credit report often enough, to overspending on insurance or mismanaging payments, we can all be guilty of personal finance mistakes. Personal finances may provide some hard lessons to learn, but they are lessons that we learn from for next time. Below we have compiled a list of the most common personal finance mistakes and how best to avoid them.
Budget can be an effective tool in any event. It could lead you to get in control of your personal finances and getting on top of how much is going in and out of your account will allow you to thoroughly plan for any big expenditures, such as planning for a holiday. While it sounds like a boring task, in times of financial trouble it can ensure that you have enough money for the important bills and determine which ones have priority. A budget is especially important when you have debts to pay and you need to know if you have enough to cover them.
Not looking at your credit report
When applying for loans or credit cards, lenders will look at your credit report to see how you manage debt and repayments. Every time you miss a repayment on a loan or card, it has an effective on your score by bringing it down. You should check your credit report on a regular basis to see how you would fare when applying for a loan. If the score suggests you would be turned down, then you need to take steps to correct it, especially if there are discrepancies that are not your fault. Financial advisors can help provide advice on how to improve your credit score if you need to, as well as allowing you to have full access to your report.
As mentioned above, missed or late payments can have a detrimental effect on your credit score. In most cases, a late payment can be down to you not having enough money in your account to cover it. This can be easily remedied by changing all your bill payments to your payday or for the day after. Doing it this way will ensure that any payments on cards or loans are paid instantly, or set up direct debits so you know the money will go out straight away.
When purchasing financial products, we sometimes do it without knowing what we are getting ourselves into, or go for the first one available. Not reading the small print is another common mistake, we assume that the product we are purchasing will be free from nasty terms and conditions. To avoid falling into the trap of purchasing a product that does not suit your needs, you should shop around for the best prices and interest rates. Each lender will be different, so it is best to have a look around at the offers, draw up a list of what you have found and compare them.
Managing your own personal finances can be a chore, but following the above tips should help you keep on top and avoid falling into troublesome pitfalls. Financial specialist can always provide the best products based on your circumstances, which does half the job for you! Just remember that you should seek professional support if you start to feel overwhelmed.
Bill Turner is a free-lance landscaper and writer. He enjoys teaching, traveling, authorship, and of course walking his dogs along the beachside.