Everyone makes money mistakes now and then. It’s only natural human behavior. If, however, you continue to make the same money mistakes again and again, you may wish to take a good look at how you interact with cash. Chances are you make the same common money mistakes everyone makes. Learn to cut them out, and your financial world is bound to improve in a significant manner.
Don’t overspend
The first rule of personal finance (and the one most people ignore) is don’t spend more than you earn. Simple as that. While it’s tempting to live on credit cards and loans, doing so is sure to catch up with you sooner or later. Make a realistic budget and don’t spend more than you take in, advise personal finance experts at USA Today.
Financial gurus say that you should not spend more than one-third of your net income on rent, housing, and home utilities. Stretch yourself too thin between paydays, and you could suffer. One-fourth to one-third income toward mortgage, rent or other living expenses is just about right.
Don’t buy new if you don’t have to
This goes for cars as well as textbooks, kids clothing, and other gently used items. Paying for something brand-new is sometimes just not worth doing, notes Investopedia magazine. Host a clothing exchange and trade school age kids clothes with other moms. Visit used bookstores to stock up on textbooks that are required for classes your kids attend.
Cars are notorious for depreciating the moment they are driven off the lot. The ability to make a monthly payment on a big car loan is not an assurance that you can afford the vehicle. Consider a used car and the lower insurance costs of owning the same. Don’t buy more car than you actually need. A big SUV may be right for a construction contractor, but ridiculous for a single student who mainly commutes to class and leaves their ride in a parking lot all day.
Pay down debt a.s.a.p.
The sooner you pay off your credit cards and student loans, the better. If you get in over your head and see now way to dig yourself out of debt, speak with a financial counselor about your money options. Click here to learn more about debt consolidation, bankruptcy and other legal financial tactics that may help you to start over and do better next time.
If you own your home, do your best to never tap into your home equity as a loan source. The idea of a mortgage is to borrow temporarily and pay off your house as soon as you can, not make perpetual payments.
Monitor your little expenses, because they do add up in a hurry. That single cup of gourmet coffee you treat yourself to at lunchtime may add up to a whopping extravagance when you look at the cost over the course of a month or a year.
Kara Perez is the original founder of From Frugal To Free. She is a money expert, speaker and founder of Bravely Go, a feminist financial education company. Her work has been featured on NPR, Business Insider, Forbes, and Elite Daily.