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We all make mistakes. It is the only way we learn and make improvements. When it comes to money, the sooner you learn, the better. With that in mind, read on to discover some of the common money mistakes you could be making, as well as some great tips on how to rectify them.
Not having an emergency fund – There is only one place to begin, and this is with not having an emergency fund. If you are living day-by-day, an unexpected repair bill could easily throw you off track. After all, life is unpredictable. So, if you don’t have an emergency fund, now is a good time to get to grips with your incomings and outgoings so that you can put away a set amount every month.
Not realizing just how expensive life is – We are sure that this is a mistake that everyone has made before! However, no matter whether you are dealing with your personal expenses or your business expenses, you need to make sure that you always recognize how much money you have got coming out. In business, this could be everything from funding your freezer display case to expenses relating to your marketing efforts. In life, this could be everything from your rent to the money you spend on your weekly grocery shop.
Student loan repayment mistakes – There are many mistakes people make when it comes to paying off their student loans. The first mistake is prioritising this over other debts. Student loans tend to have low interest rates, and they don’t impact your credit rating, which is why you shouldn’t put them ahead of your other debts. The second mistake is with regards to student loan repayments. People don’t realise the wide number of options they have available to them. This includes student loan refinancing, consolidation, and, of course, putting together your own budget and making savings that can go towards your loan. One thing you should never do, though, is borrow money to pay off your student loan.
Not knowing your credit score – It is so important to not only know what your credit score is but understanding how your credit rating works. This will enable you to improve and maintain your score so that you are in a good position should you need to borrow any money in the future. You can easily access your credit report online, and you can do so free of charge. Therefore, it should not be too difficult for you to keep on top of everything.
Trying to buy a home before you are ready – If you try to buy a home before you are able to, you are going to struggle to achieve financial freedom. It seems that there has become a bit of an obsession with regards to Millennials buying houses. We all assume that this is something we ‘need’ to do. However, buying a house is a massive investment. There is everything from the deposit to the ongoing maintenance. You know what they say; don’t run before you can walk. There’s nothing wrong with renting.
Failing to discuss money with your partner – Money matters concern both you and your partner. Failing to talk about your money could mean that you are both on different pages, which could lead to big issues later down the line.
Not keeping your business mistakes separate – Aside from all of the mistakes that we have mentioned above, another mistake that we see a lot of people make is mixing up their business and personal finances. This is an error that is easy to make. If you are in a rush, you may decide to use your business card rather than your personal card. However, this can get you into a right mess! It can make your accounting commitments a nightmare.
Failing to set up direct debits – Setting up direct debits for all of your payments comes highly recommended. If you don’t do this, you could easily miss a payment, and this will show on your credit report for six years.
If you are making any of the mistakes that have been mentioned above, it is important to put the steps in place to rectify them. A lot of people make monetary mistakes, and it is important to not dwell on any mistakes or errors that you may make. However, at the same time, it is important to make sure you put provisions in place so that you can stop making them!
