Lose weight, exercise more, pick up a hobby are some of the most common New Year’s resolutions. But, if you’re focused on managing your personal finance in 2018, here are some of the mistakes you should avoid making.
Not having specific money-saving goals
If you all talk the talk, but not walk the walk, chances are you will easily lose momentum when it comes to saving money. The first couple of months of starting to save money arbitrarily is easy, but if you don’t budget your saving, you’ll find yourself not saving anything down the road. By creating a goal, you are still able to budget around that amount. Thus, this ensures that you’re sticking to putting aside money as well as easily track your progress while you’re at it. It is crucial to realistically figure the amount you can save monthly. Not having a figure in mind will lead you to spend more and save less by the end of the month. Another fool-proof method is to save money once you get your salary so that you’re safe knowing that the money in hand can be spent.
Saving money when you are in debt
Sure, having emergency money is important, but being in debt already limits what you can do with your money. Many financial experts recommend saving three to six months’ worth of salary in case there are any unexpected payments. Nevertheless, if you’re continuously saving more than that amount, it will eventually lead to a build-up of debt revolving around high-interest personal loans, credit cards, and many more. It is essential to have backup money with you but do prioritise paying off your debts. This is because; it will cost you more than you can repay in the long-run.
Taking on more than you can handle
Many young people are getting into debt problems as they are making a very common mistake of taking on more than they can handle. What this actually means is that, on top of taking a loan to buy a home, you are overspending on credit cards, and living a lifestyle beyond your means. If you have a credit history of late payments, it will be harder for you to get a loan in the future. The solution here is to take on a loan that you are capable of handling and do seek a financial adviser if you’re unsure of handling your own debts. Also, to ensure that you pay the bills on time!
Not finding extra money to pay off debts
You may think your job’s salary is sufficient to pay off your debts, but when you’re drowning in it, finding the extra money is crucial. Sell your pre-loved items, take up a second job, babysit, do whatever it takes to get additional money. This is so that, you can plan your finances properly and put behind those nagging debts while you move forward much more quickly. If this is not possible, you can evaluate your budget for further ways you can save money.
Not having a retirement fund
This is super vital yet there are still many people aged between 25 and 35 years old who are not so optimistic about their retirement years which causes them to not plan adequately for it. It’s never too late to start on your retirement funds and you can do so by setting short and long-term financial goals. Being able to save what you can at every major point in your life will ensure you a happy as well as comfortable retirement life.