Everyone would like to be more financially successful. Many people work their whole lives to acquire money and then wonder at the end of the day why they are still in debt, without a good nest egg. There are some common mistakes that people make that hurt their financial security. Here are some of those mistakes.
1. Not Having An Emergency Fund
Emergencies happen to everyone. It could be as simple as a car problem to as detrimental as your entire basement flooding. Whatever the emergency, you need a little extra cash to take care of problems when they arise. If you don’t, you will have to put it on a credit card or take money from other areas of your life and go without.
This is why you should always have an emergency fund. Dave Ramsey suggests starting with $1,000. As you learn to save and pay off debt faster, you can increase the emergency fund to 3–6 months worth of living expenses. This means that you should know how much it costs for you to survive each month, and then multiply that number by 3–6 and work towards having it in savings.
This way if you loose your job, get sick, or have a major problem, you can survive without problems for the next couple months while you get back on your feet. Having an emergency fund will make you feel more secure and more confident.
2. Buying Everything On Credit
Everyone has heard the idea that you should buy everything on your credit card so that you can get the rewards and then just pay it off each month. Do you know who tells you to do that? The credit card company. This is because there is a small amount of people who actually pay off their card each month. Instead, the majority of people allow a balance to carry over onto the next month, meaning that they are paying a great deal in interest and are acquiring credit card debt.
Instead, get in the habit of buying things with cash. If you don’t have it in your bank account, you can’t afford it. This way you can make sure that you are not paying extra money in interest charges and that you are not getting into debt over things that you really don’t need. If you do really need it and don’t have the money, you can pull from your emergency fund or take out a payday loan, such as at http://www.kosterfinance.com.
By doing these things, you can become more financially independent.