Learning how to manage your finances can be difficult and for many, it’s a huge learning curve. Avoiding big financial mistakes can save you money and stress. Here are some of the mistakes to avoid so you can make sure you stay on the financial straight and narrow:
Not making yourself a budget
It takes a lot of time and effort to budget for your monthly expenses so many people don’t. A lot of people will think they have enough money but will find themselves scraping the bottom of the barrel and end up relying on credit cards to make ends meet.
It’s a good idea to break down your spending and get to grips with your outgoings so you can make your own budget.
Not having an emergency fund
It’s ideal to have money saved away for an income emergency. If you get made redundant unexpectedly or you become ill, it’s good to have a financial cushion for your own peace of mind.
Experts say that you should have 3 – 8 months of expenses in your emergency fund. This will cover you for any events that you don’t see coming.
Not saving for your retirement
This isn’t something many people want to think about, especially those just starting out in their careers. However, it’s an important time in your life to prepare for. You’ll no longer have a steady flow of income, but you will still need to support yourself the same as ever.
Take your company’s pension scheme seriously and use it to your advantage. You can usually contribute a bit more each month than the standard amount or you could even set up a separate scheme for yourself and your partner.
Living payday to payday
You can never predict what is going to happen month to month. It’s always better to have a little cushion in case you need an unexpected car repair or accidentally go over your phone bill. It’s always best to be prepared and have a little left at the end of each month to pay for some unexpected costs in the next.
Quitting your job without having a plan
If you’re unhappy in your place of work, you should make plans to start applying for new jobs. Unless you really can no longer work for your employer, it’s always good to still have a steady income while you look for something else.
Quitting your job will most likely leave you short on cash and will also give you a gap in your CV. This can make it harder for you to find new employment – plus, having a payslip every month offers you financial security.
Making financial decisions out of pressure
Many people make big financial commitments because they are pressured into it. Some individuals or couples commit to buying cars, homes or even getting married because they feel pressurised to do so.
It’s important to remember you do have the option to say no and you should take time to think before making big money decisions.
Not having a get out of debt plan
Loans, credit cards and mortgages – they all take a toll on our finances. It can sometimes be easier said than done to make all of these payments, but you should have a plan in place.
Figure out what all your deadlines are and how much you can afford to pay back. If you’re struggling, get in touch with a debt advisor, like our team, to discuss the options available to you. Call us on 0141 380 0588 today.