It is a known fact that managing finances and saving money is quite difficult than earning. One needs to make right decision at the right time to save money and manage the expenses. People often make the mistake of saving money at wrong places and time. Below are some common mistakes to avoid while managing expenses.
- Consistent expenditure
There are lots of thing, which we invest on every month. For example – newspaper, cable TV, magazine subscriptions, mobile apps etc. Though we don’t use them regularly, we spend on them unknowingly. These are the services that you use rarely, but need to pay every month without fail. You can make a list of unnecessary expenditure incurred on these services and transfer the amount to saving account. This amount can be invested in a better way for good returns.
- Expensive shopping
Shopping is one of the most expensive activities these days. With the increasing number of shopping malls and showrooms, people tend to buy from reputed stores. This increases the expenditure significantly. It is advised to buy food items, clothes, accessories and other items for affordable stores. Instead of buying from a one-stop-shop, look for shops that give the best deal.
- Taking loans
These days, people are living on loans. Whether it is home loan or car loan or furniture loan, you are actually paying double the amount compared to the principal amount. It is advised to stay on limited loans, rather than jumping from one loan to the other. You should make a well directed payment strategy to manage this kind of expenditure.
- Ignoring emergency fund
Most of the families are living paycheck to paycheck, and any unforeseen problem can ruin their life if not prepared in advance. Many financial planners will advise you to maintain at least 3 months of expenses in bank account. The account should be accessed easily.
- Ignoring extra income options
People often think that their salary is taking care of monthly expenses and they don’t want to spare their personal time for additional income options. But, one should know that nothing is guaranteed and bad time may turn anytime. Though you are in a decent job, you should cash in your skills and earn as much as possible. The additional money you earned can help you at the time of financial crisis.
- Buying large things
Buying large house or car is another mistake made by people. If you don’t have a large family, you should avoid buying a large house or car. Large things mean greater taxes, maintenance and utilities. You should be satisfied with small thing, if you want to deal with your monthly budget happily.
- Paying off debit with savings
Savings are an important part of financial management. Even the most disciplined planners will have tough time placing the money aside. Some people pay off their debts with savings, as a result of which their years of saving will be wiped out in minutes. One should always create a plan to pay back and rebuild their savings account.
- Over expenditure
Many people are not consistent in their monthly savings and spend on unnecessary things. They even over-spend the amount using credit cards, which eventually affects their budget goals. It is essential to set clear goals towards money saving. One should increase the amount every month by cutting down unnecessary expenditure on travel, shopping and other value added services. The amount should go towards savings and be invested wisely.
Author Bio – Michael is a freelance writer and financial advisor. You can read his blogs to know more about financial management tips. To know more, visit http://leasequit.com/.