Alright! It’s finally here! I bet you’ve been staring at your phone all week waiting for this next blog to post. Okay, we know you weren’t, but we like to pretend. Here are five additional money management mistakes and tips on how to fix them.
1) Not protecting yourself for a rainy day. We tend to underinsure ourselves, especially those that are optimists. You can be injured and not able to work at the drop of a hat. Who’ll pay your bills?
The Fix: Make sure you take out proper insurance like disability, life, and health, so you and your family can survive if something happens. You won’t end up losing everything you’ve worked so hard for, and the peace of mind you’ll have is worth the cost.
2) Not having your savings automated. Think of it like this: if someone gives you $100 cash and you keep it in your purse or wallet, it’s so easy to spend. On the flip side, if someone gives you $50 cash and puts $50 into your savings account, chances are that $50 in your savings will last a little bit longer.
The Fix: Set up automatic transfers to your important accounts such as a loan, a retirement account, your mortgage and emergency savings. You’ll know that your bills are paid and that you’re set for a rainy day. What’s left will be for day-to-day discretionary spending.
3) Overloading on debt. Not all debt is bad. Loans may allow you to go to college, purchase your home, or get a car. The trouble comes when you keep adding to your debt.
The Fix: Only take on debt that is absolutely necessary and that you can handle. Try to pay off what you have before adding a new one. Make sure you pay bills on time and keep low or no balances on your credit cards in order to maintain a solid credit score. Then, you’ll qualify for a decent rate when you do take out a loan.
4) Not knowing or managing your credit history. Your credit score determines what interest rate you’ll pay on loans and your credit score is determined by your credit history. If you don’t know what affects your credit score, you could be in for an unpleasant surprise when you apply for a loan. You may end up with a really high rate or not qualify for a loan at all!
The Fix: Go to annualcreditreport.com to see what’s on your credit report. This site allows you to get one report from each of the major credit bureaus, TransUnion, Experian, and Equifax, per year. It can be helpful to stagger pulling your reports throughout the year to have a better handle on changes as they occur and to catch problems before they’ve caused too much trouble. The report won’t show your credit score, but it will show you the credit history that contributes to your score. If you have collections, judgments, late pays or other bad items in your history, or if you apply for multiple credit cards, your credit score will be lower. (You can purchase your credit score through the credit bureau itself.) Talk to your lender about what changes you can make that will improve your score.
5) Not continually educating yourself about money management. Finances are always changing. Each month, there may be an update to credit card fees or a new way to save money. Ignoring your finances can cost you big time.
The Fix: There are plenty of tools at your disposal. For instance, Next Gen from CitizensFirst can help you learn tips and tricks to save and manage your money. As a bonus, Next Gen can lead you in helping out in your community. Money Talks News is another great resource to keep you up to speed on what’s going on in the finance industry. This site shows you ways to destroy your debt along with helping to accomplish your goals.