Money Mistakes: Four Financial Faux Pas to Avoid
It’s easy to get caught up in the moment and practice poor financial management. It can happen to anyone. Thankfully, there are ways to minimize the consequences or completely rid yourself of the bad habits. Here are four bad habits to get in check now - keeping both you and your money in order.
Impulse shopping
A pointless purchase every now and then is an okay way to reward yourself, but just don’t let it get out of hand. Consider why you are making the purchase before you swipe your debit card at checkout. Perhaps you are not demonstrating self-control, filling a void, or you’re the perfect target for a convincing marketing message. Being responsible with your money and purchasing decisions shows that you are financially mature.
TIP: Limit the luxuries to celebrations, or vow to contribute a matching amount to savings the next time you buy something for yourself.
Payday loans
Just don’t do it! Sure, payday loans may be fast, easy to access, and you may have less guilt about borrowing a smaller amount. Unfortunately, this type of borrowing can snowball out of control when you are committing to pay as much as 390% (sometimes) on borrowed funds. Lenders typically require borrowers to have a bank account and a regular paycheck. Just be prepared for your next paycheck to be consumed by your repayment of the initial loan…then guess what, you need to borrow some money again. And so it begins.
Overdrawing your account
Know how much is coming in and definitely be aware of what is going out! This is the foundation of being financially responsible. Just think of what you could have done with those overdraft fees charged by your financial institution. You could have been padding your savings account, taken a friend out to lunch or just rewarded yourself for staying on budget.
TIP: Utilize your mobile banking app to stay on top of your balance and transactions! Seeing your balance will often influence how much you’re willing to spend or resist the urge to splurge entirely.
Maxing out your credit cards
Repeat after me: “My credit limit is not my spending limit”. Your first credit card was probably an exciting (and maybe a little scary) experience. Maybe you imagined all the things you could buy instantly with your new credit line. Remember, while it’s difficult to be patient – you will feel a lot more empowered by saving your hard earned money on a big purchase than you will making credit card payments each month. Plus, when your credit card balance is 50% or more of your credit limit it affects your credit score in a negative way. Trust us, your score will help you make the biggest purchases of your life if you play your cards right
Being a responsible spender AND saver demonstrates financial maturity. Make good choices and think about the reasons behind your urge to splurge.
By Campus USA at 24 Oct 2017, 14:58 PM