Do you think you’re managing your money perfectly, or have you made a few mistakes in your time? If you’re like most people, your track record is a little spotty.
A misstep here and there isn’t the end of the world. It only becomes a problem when your financial faux pas becomes a habit.
Read this list to make sure you aren’t committing any money mistakes from here on in.
1. Making Only the Minimum Payment
If you have a credit card or line of credit, the online loan experts at MoneyKey recommend you always pay more than the minimum. Ideally, you should pay your full balance.
Why would you do that when the minimum is the cheapest way to keep your account in good standing? Because the minimum prolongs how long you stay in debt.
The minimum is a small portion of your balance, usually a flat fee or percentage of your bill. When you pay it, the majority of your balance will carry over to the next billing month.
This balance is subject to interest and finance charges, which will increase your amount owing. Every time you leave a balance, you’ll accrue more.
Between your smaller payments and the build-up of charges, paying off debt can take a long time with the minimum. All in all, you can wind up spending a lot more money on fees this way.
2. Living with Just One Savings Account
If an online line of credit is your backup, your savings account should be your first line of defense against the unexpected. An emergency fund is one of the most important things you can have today. But it’s not the only savings you should be thinking about now.
Savings help you achieve financial goals of all kinds — from planned shopping sprees to vacations, real estate, renovations, education, retirement, and more.
With so many targets, keeping your assigning a separate account for each goal can be helpful. This way, you won’t be tempted to dip into your emergency fund when you take a holiday. Instead, you can have a distinct account for a vacation and set up a regular contribution, ensuring you meet your goal to travel.
3. Spending Without a Budget
Saving and paying them minimum is easier when you have a budget. A budget gives you an opportunity to find clarity with your spending. Not only will you see how much money you need to cover your essentials, but you’ll also find out how much cash is left over for the fun stuff after you pay them.
If you’re finding it hard to cover your financial priorities, your budget is also a chance to flag bad spending habits that may be standing in your way.
Look at regular expenses with a critical eye. Do you really need that fifth streaming platform and meal kit subscription? What about the gym membership you never use, or the ride shares you take instead of walking or taking transit?
Eliminating spending habits like the ones above can free up your cash for better uses — either paying off a line of credit or saving for a vacation.
Put an End to These Mistakes
If you’ve fallen into the habit of spending without a budget or making just the minimum payment, here’s your chance to right some wrongs. Breaking these habits will help you secure a financially bright future.