Maybe you earn a decent enough income, but you never feel like you have any cash left to splash on yourself at the end of each month. The trouble is, having a great job doesn't necessarily mean that you become instantly financially healthy.
There are plenty of traps that people can fall into that consume large chunks of their income, leaving them with almost nothing left to play with. If you're worried that your money habits are keeping you from living the good life, here are the mistakes you need to watch out for.
Choosing the Wrong Kind of Loan
No matter what you do in life, there's a good chance that you're always going to need to get a loan at some point or other. For instance, you might need a loan to help you pay for your education expenses when you're getting a degree. Alternatively, you might need a loan to help you out with the costs of paying for your mortgage.Whatever your loan requirements might be, make sure that you take the time to compare your options carefully before you jump into anything. There are plenty of different loan products out there, and each come with their own unique strengths and weaknesses. Choosing the right loan, with the right APR can save you a lot of money on interest in the long run.
Living in a Home that's Too Expensive
It often feels like a waste of money to pay rent to a landlord when you could be spending your hard-earned income on a down payment for a house that you'll someday own. While getting a mortgage can be better for you in the long term, you need to think carefully about how you go about paying for a house. Don't assume that just because you can afford a $1,000 rental each month, you can afford the same on a mortgage. Buying a house comes with additional expenses to think about, like making your own repairs and conducting your own maintenance. Additionally, there's always the chance that the interest on your mortgage payments could go up.
Committing to Expensive Hobbies
We all have things that we like to do when we aren't spending most of our waking hours at work. A hobby can be a great way to relax and tap into your creativity, but it's important to make sure that you're not spending too much on a hobby you can't afford. Sometimes, you may even be able to find cheaper ways of doing the things you enjoy. For instance, if you like working out, you don't necessarily have to pay for a personal trainer and a gym membership. Getting outside with the kids for regular runs, hikes, or bike rides can be a great way to stay fit and keep everyone happy without spending any money at all. Think carefully about your hobbies and how you can make them more financially viable.
Not Paying Attention to your Spending
One of the biggest mistakes that people make when it comes to money management is that they don't pay enough attention to how much cash they spend on the &little extras& each week. While most people have a good idea how much they're spending on things like the mortgage, rent, and utility bills, they don't always know how much their daily coffee or work lunch adds up to each week. If you really want to make the most out of your budget, then you need to make sure that you're paying attention to every penny. Don't just pay your bills and instantly spend what's left over, come up with a strategy to ensure that you're constantly improving your financial health.
Forgetting to Save for Emergencies
Finally, a common issue that many people have when it comes to money is that they forget how important it can be to save back extra cash for emergencies. Track your spending, make a budget, and then make sure that you put a small safety blanket of cash aside each month as part of your budget strategy. Having a savings account to fall back on when times get hard ensures that you don't have to tap into any other money you might be holding onto for things like family vacations or home improvements. Emergency savings also mean that you have some support available for expenses that you might have forgotten to factor into your budget, like birthday parties, or sudden repairs.
*This is a collaborative guestpost
