If the past year and a half has proven anything, it’s that we’re all human. Most of us make mistakes at one time or another — and often, those mistakes are with money. That said, here are four common mistakes that can have far-reaching effects on your ability to have the financial peace of mind you’ve dreamed of.
Having no rainy day funds. If you have a philosophy of spend today, save tomorrow, you may be very unhappy with your choices in the event of a major setback, such as a large medical bill or costly car repair. Everyone should have at least three to six months of living expenses in a savings account for the unexpected, including a job layoff.
Spending too much. It’s so easy to spend and so hard to save! Sometimes it’s hard for middle-income families to remember that it’s not always what you earn, it’s how much you spend and what you save that determines your level of financial security. Increasing your income over time won’t provide your family with financial security unless you are able to effectively manage your spending and create and stick to a monthly budget. There’s no shortage of examples of celebrities and sports stars who made millions but ended up broke because of lavish spending.
Piling on the consumer debt. American families are, on average, loaded down with a wide variety of debt. The average household, for example, carries credit card balances of nearly $7,000, owes nearly $28,000 in car loans, has nearly $47,000 in student loans and has a remaining balance of nearly $190,000 on their mortgage. If your goal is financial security, you’ll want to limit and have a plan to reduce the amount of your consumer debt. The higher the amount you owe on your credit cards and on auto and other types of loans, the fewer financial options you have and the longer it takes to become debt-free.
Not getting the financial help you need. The right financial guidance can help you get back on track and help you view your money differently. With the right advice, you’ll come to see money as a tool that helps you achieve your dreams and not as something stressful.
Through 101 Financial, I provide educational classes that can help individuals and families budget better, bank smarter, manage debt better and build strong credit. The 101 Financial system is a simple starting point for taking control of your finances — and your life. Get started today! Contact me to learn more: (503) 679-3490