The majority of us are careful with the money that we have. After all, we have to be in this day and age. The economy, whilst improving, is still rather dreadful. It is therefore important that we know where every single penny is. Most of us are pretty good at this. However, many of us also make a few mistakes with our money.
Most of these mistakes are things we do not know we’re doing something wrong . Here we want to highlight these problems and provide suggestions on how you can avoid them.
Mistake #1: Using a Debit Card to Pay for Things. That’s what it is there for right? Well, yes. It is. However, using it is a massive mistake. You see, the company that you pay will not take the exact amount of money straight away. They need to pay for each time that they request money from a bank and thus they will do transactions on bulk. The problem however is that they will put a hold on your account to some extent. It will be far higher than the transaction cost though. I have known people to put $30 on their debit card and find that $80 is set aside for a few days. This is not good at all. This could lead to you overspending and this of course could end up costing you money in overdraft fees.
We recommend: I think your best bet is to always use a credit card. Just make sure you use the card wisely and pay back often!
Mistake #2: Splurging on yourself too often. Do you know what splurging on yourself really means? Well, it is treating yourself once in a while. Not every single day. If you do it every single day then it becomes the norm. It becomes almost like an addiction. You do not want this at all.
We recommend: You see, you want it to actually feel like a treat. Yes, this means that you are going to be giving up on that expensive takeaway breakfast you have in the morning (you should add up the cost of that once in a while, it is not pretty!). You need to budget yourself. You should also only splurge as a reward. You do not want to do it otherwise. If you do then you will spend more money than you need to.
Mistake #3: Getting a Prepaid Card. They may seem like a good idea. However, you will be surprised at just how expensive they are. There seems to be a fee for everything.
We recommend: Most people should be able to open up a savings account at some banks and thus you do not really need a prepaid card. You get a free debit card with it anyway!
Mistake #4: Paying off your mortgage early. This is not a good idea. Studies have shown time and time again that any extra funds would be best placed in your 401k account.
We recommend: Invest your extra cash on a 401k instead. You will gain if you go down this route as you get the most bang for your buck (remember, 401k account savings are before tax whereas if you pay your mortgage off, well, the money here is taxed).
This is of course just a very brief guide to avoiding those money mistakes that all of us are making in our daily lives. There are plenty more than I have not covered. However, this should be a good starting point.