Top 7 Most Common Financial Mistakes

The problems that are faced by people due to insufficient funds to live a good life can be attributed to certain financial mistakes that they make. Let’s look at seven of those.

Borrowed Money

Credit cards might not be an immediate threat to your net worth but they harm your personal economy in ways that may not be so direct. The price at which a substance is charged gets increased every time you opt to pay for them using a credit card.

Excessive expenditure

It is well known that however much money you have, it can always be spent and lost. Every time you spend that extra buck on something, it keeps adding up to your list of expenditures and subtracting from the savings fund that you should have added to.

Too many payments

There are so many things that we keep paying for and never stop and question if we really need those things that much. There are plenty of things which leave you no sense of ownership but still a bunch of money is periodically spent in them. A minimalistic life where you make a list of the facilities that you could do without and the ones you definitely need should be helpful.

Investing on a new car

It is simple to understand that if a person borrows cash to buy a car, they’ve decided to pay interest on something whose value depreciates. A lot of cars are released in the market and shouldn’t be blindly be invested in. There are a lot of people who lose s lot of money because they trade away cars as they hadn’t thought about it.

Too much expenditure on your house

It must be understood that the bigger your house the better it is may not always be the correct way to look at it. There are a lot of factors which go into the selection of a house and then making it into the perfect home. Buying a huge house may not be required and that decision should be taken keeping in mind the number of people who inhabit it.

No respect for Home equity

It is not a good move to take money out of your home equity just because you have a random expense coming your way. Its ownership must be protected and preserved instead of perpetual payments here and there.

Being dependent on consecutive pay-checks

History has it that it isn’t impossible to enjoy a good standard of living without always drowning in debt. The household savings rate of U.S. was 5.5% while that of France, Germany or Japan was over 10%, and it is well known that the people in the latter places live as good a life as any. Once people get into the habit of overspending, it is tough to get out or even keep a track on the expenses.