By changing just a few habits, you can change your entire financial stance. You can cut bills, have better cashflow and even boost your investments. All of that sounds really exciting, but you will have to make a few changes before you can reach that level of success. Take a look at these 10 tips to help you avoid making some huge money mistakes:
Take the right risks. When it comes to your finances, a certain amount of risk is present (especially if you’re dealing in the stock market). You may panic at some point in the beginning when you see the apparent risk. If you don’t handle these correctly, taking a risk can ruin your financial stance in the world. Before you take any huge risks, make sure you understand what could happen if it goes wrong as well as what it will take to fix it if it does.
Set your goals. Sometimes life gets in the way but you should always have an end game. For some the goal may be to quit their 9 to 5 job. To do this, you would have to secure a significant source of passive income or a more flexible job. Others may have a goal of saving, say, $2,000 by the end of summer. They would have to adjust their spending. Without these goals, there would be no reason for change or to push towards something more. Always have a goal and keep your eyes on the prize.
Set reachable goals. According to The Hip Pocket, many people make the mistake of aiming for goals that are simply impossible to reach. You must decide what it important to you financially, set goals and then figure out what you must do to reach those goals. Assess your ability to do those things and set a reasonable time frame. If you do not have a good idea of what is doable, you’ll wind up setting yourself back.
Take time to learn. When approaching big money decisions, learn as much as you possibly can about what you are about to do. For instance, if you are about to put a substantial amount of money into the stock market, you would want to research the company (or companies) you are putting your money into. If you do not know enough, you will not be able to assess the risk nor will you be able to set obtainable goals.
Don’t make it hard. Saving money and managing it is hard enough without you making it even harder for yourself by manually transferring funds or taking cash out and putting it aside. Instead of doing things manually, you can set up direct deposits and automatic transfers. In addition to this, many investment apps also allow you to make automatic deposits into your investment account each month as well. You can save yourself a lot of trouble by automating your financial decisions.
Set a budget. This is a pretty basic step but you would be surprised by the number of people that do not have budgets. Time reported that 82 percent of Americans don’t keep a budget. This sets many people back from financial wellness. Without a budget, you won’t likely be able to reach your financial goals.
Don’t spend for rewards. People with credit cards that have cash back rewards or other rewards often spend simply to get the reward, thinking they are saving money by receiving the cash back. This simply is not true unless you are using a credit card hack like these. You are still spending unnecessary money and spending outside of your budget.
Stop accepting fees. Banks, credit card companies and other financial institutions have a lot of fees that you can avoid. For instance, many people simply accept ATM fees by using out-of-network ATM machines. If you plan on taking money out, you can plan ahead to get cash from your bank’s ATM and avoid the additional $4+ in ATM fees.
Have an emergency fund. Emergency funds are extremely important! A recent report showed that most Americans do not have enough money to cover a $1,000 emergency. Without this money set aside, many people go into debt trying to pay for car repairs, medical bills and other emergencies that simply happen.
Don’t try to do it on your own. You can seek financial counseling. Many people seek this type of counseling so that they are able to open a loan, buy a house or if they have met financial hardship. However, you do not need to wait until you NEED some financial counseling to get it. Consulting with a professional about your finances is never a bad idea. Once you share your goals with them, they can help you reach success. Never be afraid to ask for some guidance.
Do you have any tips on how to avoid common money mistakes? Let us know.
Photo: Flickr: 401(K) 2012