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Everything Personal Finance

Money Matters: Problems and Pitfalls To Avoid With Your Finances

Money can be difficult to manage- regardless of how much you earn, chances are you’ve felt the pinch at times. Whether it’s an unexpected expense or too much month at the end of your money, most of us can experience this at one stage or another. However if you’re regularly struggling to get by despite the fact that you do earn enough money to live on, there could be some pitfalls you’re making that are relatively easy to fix. Are you making any of these mistakes?

Not Budgeting Correctly

Regardless of how much you earn, whether it’s a little or a lot you should always have a budget. Efficiently managing your money means all of your priority outgoings are covered first and are never missed. You can then save or spend whatever is leftover without living above your means and falling behind with payments. You need to know what money you have going in each month and what goes out, along with amounts and dates. A budgeting app makes this easy and can send you reminders to pay things too. It’s always a good idea to set up a separate bills account and pay your bills by direct debit. A lot of the time this works out cheaper, and when you’ve worked out exactly how much these cost each month all you have to do is transfer the right amount over from your main account. Mistakes with your finances could mean a couple of missed payments with charges or they could end up being much more serious. You could end up ruining your credit score, or even fall behind on your mortgage and risk repossession. You can look into stopping repossession with flying homes help, however avoiding this in the first place is always your best bet. Make sure your most important bills are covered before you spend a penny on luxuries or unnecessary items.

Not Using Internet Banking

Internet banking is an incredible tool, and really can make life much easier. It allows you to keep on top of your finances, check balances, make transfers and pay bills right from your phone or computer. No more queuing in the bank or ringing them up, you have access to your account information in just a few taps. If you’ve not taken advantage of this service then you’re missing out, rest assured it’s very safe and your information is well protected. Sign up and make the most of technology when it comes to banking, you save yourself so much time and hassle. And because you can have notifications sent to your phone, you can avoid missing direct debits or going over your limit.

Not Being Insured

Hoping for the best but planning for the worst is a motto we should all live by. And planning for the worst means being insured, that way if anything does go wrong you don’t end up out of pocket. Buildings insurance, contents insurance, boiler insurance and mortgage protection insurance are all worthwhile for homeowners. Health, dental and life insurance are other examples, and pet insurance if you have pets. A relatively small operation could cost thousands, so having this in place will protect you if you need to make a claim. Have a look at different policies and work out what would be best for you. Be sure to read the small print so you know exactly what it is you’re covered against.

Not Having Emergency Savings

Insurance is crucial, however on top of this you should always aim to have emergency savings. That way you have instant access to cash if you need it, it could be to replace a broken down appliance, fix a broken car or even to access abroad if you end up stranded on vacation. Life is unpredictable, there are a million reasons why you might need access to money right away so have your buffer there.

Getting Into Debt

Any of the pitfalls above can lead to this. Often debt comes about purely due to poor planning. There are some people out there who run up huge debts with no intention of paying them back, however for the most part people in debt start with the best of intentions. Because interest keeps generating and companies can keep increasing balances, it can happen fairly gradually until you reach a point where you can no longer pay. If you’re on this slippery slope then stop spending before things get worse. Cut up your cards and work on paying down balances. Having just one or two lines of credit open maximum is a good rule of thumb, lots of cards and loans will all rack up interest and it can become difficult and confusing to pay. One tip if you’ve found this has happened is to take out a consolidation card or loan, and use this to pay off everything else. And importantly, close the paid off accounts so you can’t spend onto them again! If you get a consolidation loan or card these usually come with an interest free introductory period too so you get a few months to pay down the balance as much as you can before having to pay any interest. If you don’t have a good enough credit score to take out a consolidation loan then another option would be to talk to a debt management company. They can work to get interest frozen and repayments lowered putting you back in control of your money.

None of us are perfect, we all make some mistakes when it comes to money. Whether it’s overspending, being disorganised or not planning for the future. But bearing these pitfalls in mind and taking steps to protect yourself will set yourself up for success with money. You avoid unnecessary charges and interest, and overall it helps you feel in control of your life since you know exactly what money you’re working with.

Have you made any of these mistakes in the past? What do you do to stay on track financially?