Have you ever found yourself trying to figure out how to pay a bill or cover an emergency that has suddenly popped up unexpectedly. It’s nice to know you’re not alone. Money mistakes can happen to anyone. Know that you’re not alone and you can change your lifestyle and family when you avoid the next money mistake.
Five Money Mistakes
1. There isn’t a budget
Most people don’t prepare any type of budget which can lead to overspending compared to the amount of income that is coming it. When this happens people often turn to credit cards, payday advance loans, and other methods to cover the short-term hole in their budget in order to make until the next payday.
2. Purchasing too much house or car
Your home should only be about 30% of your income. With more people renting, rental prices are going up with some rentals being greater than 45% of your income which can stretch budgets especially with credit cards, car loans, and student loans.
Additionally in several areas of the country, there is a shortage of the number of houses on the market to purchase which is driving up the price of homes.
3. Too much debt (credit cards, student loans) / Carrying a balance
With no budget and their income being stretch to make it until the payday, debt begins to add up with student loans, car loans, payday advance loans, and credit cards. What started out as a credit card transaction that was going to be paid off at the end of the month has turned into a monthly revolving line of credit with a balance and high interest rates.
4. Using credit cards to cover the budget
When life’s emergencies happen without any savings or emergency fund, people tend to turn to credit cards and payday advance loans to get through to their next payday which have interest rates and can take years to pay off. However, when people use credit cards and payday advance loans to cover their emergencies, their paychecks are smaller because the minimum payments are increased or the payday loan advance has to be paid back. Either way, there is less money to cover expenses or to put towards an emergency fund each month when you use payday loan advances and credit cards..
5. No savings / retirement
Studies have been released lately showing that most Americans live paycheck to paycheck with no savings. The recent studies show that most individuals and families couldn’t afford a $500 emergency because there is no money in savings. Thus, they take their credit cards, get payday advance loans, or other loans to cover their emergency.
A budget is great way to avoid debt or begin setting up a savings account. Budgets allow you to know what income is coming and where you are allocating your expenses thus lowering the possibility of recurring debt and increasing your savings and retirement accounts.