When you are trying to save money to spend on the finer things in life, it helps to be savvy about the way that you use it. People often go through their adult lives not realizing some of the mistakes that they are making. To make sure that you are being as smart as possible about the money that you are spending, we have created this guide.
Read on now to understand the kinds of big mistakes that could be causing a large dent in your wallet:
Not Having Emergency Savings
No matter what life throws at you, it’s deeply important to have a large cash fund in order to weather any challenges. As a general rule of thumb, you should have at least six months of savings to be able to tap into you whether or not your car broke down, your house was broken into, you have a wedding to attend or a funeral or organize.
Nonetheless, if you do need money for a car repair, for example, you can always apply for an auto repair loan to help you pay for those costs.
Not Putting Money in Investment Account
Considering that the S&P 500 has an average return of about 9% each year, by not putting your money in an investment account, you are basically turning down these returns. While investments do entail some level of risk and are in no way guaranteed, one way that you can balance this risk is by either spreading your money out or making use of a financial manager.
With these points in mind however, it’s important to remember that you should only be investing your money if you have enough to spare. A solid backup option then would be to put your money in a flexible savings account, which does gain some interest, but will still allow you to withdraw each month.
Paying on Credit
When you want to buy something but you don’t have enough money to pay for it upfront, it can be very tempting to use your credit card first and then worry about it later. Nonetheless, this can be a very dangerous idea as you could end up in debt. This is a problem across America with the average citizen carrying over $6,200 in credit card debt.
Instead, you should only use your credit card when you are sure that you will be able to pay it off in full each and every month.
Not Tracking Your Spending
It can be very hard to now how much money you are spending if you do not track your expenditure. If your monthly bills always come as a surprise, this is a surefire way to fall deeper into dept. With the rise of mobile banking apps, you can always have a clear idea of what you are spending and how you can cut down your bills.
By understanding the type of expenditures that are having the biggest impact on your bank balance, you can then start identify ways in which you can put those expenses under control.