It’d be nice if we could just go through life without having to think about money. Alas, this is the real world, and unless you’re lucky enough to be independently wealthy, then you’ll need to think about money matters from time to time.
While achieving a healthy financial landscape is possible, it becomes much more difficult if you’re continually making money mistakes that have an overly negative impact on your financial health.
In this post, we’ll run through a few key errors people repeatedly make. Keep these ones at bay, and your financial ambitions will be much easier to achieve.
Underestimating How Much You’ll Need in Retirement
It can be difficult to think about retirement. If you’re in, say, your forties, then it’ll feel like a long way off. But here’s the thing: it’ll come around sooner than you might think, and when it does, you’ll need to have money in the bank. The best way to prepare for retirement is to ramp up your savings account. Thanks to compounding interest, even putting away small amounts each month when you’re in your thirties can lead to a big pot of money when you reach retirement age.
Casually Lending Money To a Family Member
Not many people would choose to give their money away, especially when it’s thousands of pounds. Yet that happens more regularly than you might think. A person may lend a friend or family member money believing it to be a loan, but the recipient views it as a gift — and the money never gets returned. When you’re lending money to friends or family members, it’s best to have a loan agreement in place. Not doing so can lead to misunderstandings which can cause family tension and also result in you losing your money.
Failing to Identify Your Money Pits
We’re all guilty of treating ourselves a little too much from time to time. However, if ‘from time to time’ turns into ‘always,’ then you’ll have a problem. It’ll become much more difficult to build your bank account reserves. It’s recommended to use an app that categorises where and how you spend your money. After a few weeks, you might realise that you’ve been spending a small fortune on takeaway food. Once you’ve got a grip on where you overspend, you’ll find it easier to put money in places where it can have a genuinely beneficial impact.
Keeping Up With Expectations
You’ll need a roof over your head, and, most likely, a car too. But you don’t necessarily need to have the best house or the best car. All too often, you see people going into debt or just more broadly impacting their financial standing all because they’ve overspent on the expensive aspects of life. While it can be tempting to buy a house that’s just above your budget, the truth is that you’ll eventually come to regret it. Whether it’s a house, car, or anything else, make sure whatever you spend is in line with your financial reality.
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