Perhaps you want to move out, or are sick of public transport and plan to buy a car. Maybe you’re overwhelmed by professional obligations and need a nice vacation next year. Whatever it is, if that money keeps slipping through your fingers, here are some potential reasons why:
1. Using Your Credit Card for All Purchases
Credit cards are a great way to handle your finances, but it’s easy to get carried away. Consider paying for groceries with cash or debit cards and only use your credit card for the big items or emergencies. You can also use your credit card to make a big purchase, such as a trip, a laptop, or a new car, but pay off that purchase each month so you won’t be paying interest on a large sum of money in the coming months.
2. Getting Into the Habit of Spend, Spend, Spend
Ever heard the term retail therapy? It sounds harmless, but if you’re finding excuses to shop every week, you’re potentially putting yourself in financial hot water. It might be easier to get rid of the bad habit by setting a monthly limit on how much money you can spend. For example, maybe you only want to use $100 of your monthly budget on clothes, books, etc. If you want to buy more, you can use the rest of your money for other items, like groceries.
3. Not Keeping Track of Spending
If you’re struggling to manage your money, it’s good to keep a log of your spending for a few months. If you find some areas of your spending that are out of control, you can make adjustments in the future.
4. Borrowing Money from People Close to You
If you find yourself reaching out to a family member or friend for money, you might need some sort of financial counseling. Sure, it’s easy to ask a family member for a loan, but if you don’t feel comfortable paying them back, it could spell a negative relationship in the future. It’s also good to remember that many family members don’t expect to be paid back, so you’re potentially taking advantage of that.
5. Not Having Enough Emergency Savings
Even if you’re cautious about your spending, it’s not worth it if you can’t pay for those necessary expenses out of pocket. For example, if you don’t have enough money in the bank for a sudden illness, a car repair, or even a $200 emergency purchase at the store, it could throw your entire budget into chaos. Ensure you have an emergency fund, ideally in a savings account, containing enough money to cover three to six months of expenses.
6. Not Carrying Out Your Weekly Budget
It can be easy to get distracted or derailed by the daily dramas of life, but it’s essential to stay on track. Put your budget sheet on the fridge, or even keep it in your pocket so that you can review it every single week. That way, you can stay on track to achieve your financial goals.
Conclusion
Now that you know some of the most common pitfalls when it comes to money management, you should be able to avoid some of the most common money mistakes. If you keep a careful watch on your spending and keep your emergency savings on hand, you should be able to enjoy your financial freedom for years to come.
At Newcastle Financial Planning Group, we are passionate about doing things differently. Many financial advisers look at your income and assets and then tell you what you can achieve. Our specialist financial advisers take time to tailor our advice to our clients’ individual lives and goals, delivering the best possible outcome for you based on your needs. If you’re looking for a financial advisor on the Gold Coast, we’ve got you covered. Get in touch with us today to explore your options.
