It is normal to make mistakes in life, but some errors may be more expensive than others and might even ruin your personal finances. Here is a list of errors that you may be making, but which you can avoid:
1 – Underestimating Your Insurance Needs
It is important to be insured and there are very good reasons for that: life insurance, disability insurance, home insurance, car insurance, travel insurance, and many other types of insurances that cover your property, your assets or your person in case of disaster, illness or accident. Can you imagine how ruined your finances would be if your home or apartment was damaged by fire and you were not covered by insurance? Do not neglect your insurance needs.
If you never put any money aside in your savings or your little piggy bank to get you through unforeseen or emergency situations, you may bitterly regret the day your car suffers a major breakdown. To be able to save and put money aside, you have to adopt good financial habits and spend less than your income. You can use coupon codes and deals to save money when shopping.
3 – Do Not Take Care Of Your Credit Report
Do you believe your credit rating is not important? Well, news flash your credit report has a greater impact than you think on your personal finances and your life in general. A good credit rating will allow you to rent an apartment without having to have a co-signer. A good credit will lower the cost of your car insurance and your home insurance. A good credit can qualify you for a credit card with a low rate. A good credit rating will allow you to get an emergency personal loan if needed, saving you from ruining your personal finances.
4 – Ignoring The Bad Financial Habits Of Your Partner
If you have a spouse, their finances can impact on your own, whether you have a joint account or separate finances. When you live as a couple, you need to be financially responsible, one like the other… If one of the two partners has no money to pay their part, the other partner will have to take charge and pay for everything.
5 – Do Not Set A Budget
No matter how much you earn per year, you need to set a budget. If you have an annual salary of $100,000 but spend $110,000 a year, you do not have better finances than a person who makes $20,000 a year and spends $18,000. It is important to establish a budget to learn to control your spending and know what expenses should be cut as needed.
6 – Do not plan anything
You may think you do not need planning but everyone needs to plan, be it short, medium or long term. You need to set goals in life and goals to achieve with your personal finances. Want to put money aside for a new car? Want to save money for your retirement? Want to take a trip to Europe in 1 or 2 years? Want to pay off a debt faster? How will you get there? By planning!
7 – Do Not Pay Your Mortgage Or Rent On Time
You should always pay your mortgage or your rent on time. Your mortgage or your rent is probably the highest monthly payment you have to pay and it’s probably the most important payment, because it is your home. It can happen that you have trouble paying your housing or mortgage, that’s why it’s important to have an emergency fund.
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.