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Common Money Mistakes Everyone Makes
Learn Typical Money Mistakes & Strategies to Avoid Them
Not Knowing Where Your Money Goes.
If you're living paycheck-to-paycheck, you may need to eliminate some small daily purchases—like trips to the coffee shop, movie rentals and subscriptions.
Often, these little expenses add up. To track your expenses, use
Money Management Tools in Web Branch. Determine where your smaller purchases are going, and
see if you can live with less of them.
Not Planning for Annual or Bi-Annual Bills.
Some bills only show up once or twice a year, like property taxes and car insurance. Also, there are holidays and birthdays to account for. If you're busy
purchasing other things, and these show up, they can send your budget into a tailspin. To avoid this, figure out how much you spend on the expenses for the
year. Then divide the amount by twelve, and save this smaller amount each month. If property taxes are a concern, consider an escrow account, where your
property taxes are collected along with your mortgage payment every month.
Not Having an Emergency Fund.
Emergency funds are crucial to have and can help you prepare for the unexpected—whether that is a car repair, an appliance replacement or job loss. Experts
recommend having 6-9 months of living expenses in your emergency fund. If you need to start or grow your fund, there's a couple of things you can do. Start saving
just a small amount per paycheck, like $25, then increase it as you feel more comfortable. You can even have the amount taken from your paycheck automatically. Treat
it like a bill you pay yourself every month. If you reduce an expense, such as a car payment, put aside the amount of the payment in your savings account. You won't
miss it since you're used to not spending that amount.
Not Paying Down Credit Card Debt.
If you're only making the minimum payments on your credit cards, it will take you a long time to get out of debt. For example, if you have a $10,000 balance at 18%
interest, it will take 42 years to pay off your bill. Ideally, use credit cards for small purchases that you can pay off every month—or at least make more than
the minimum payment. It may be best to use your emergency fund for unexpected purchases rather than your credit card. You can also take advantage of our low-rate
Not Reading the Fine Print.
If you enter into a financial agreement such as a credit card contract or mortgage loan, be sure to read the fine print watching out for over-the-limit and overdraft
fees, prepayment penalties and penalty interest rates. Being aware of these fees will help you avoid them—money that is easily savable. If fees are unreasonable,
shop around for a better deal.
If you need help creating a spending plan or building an emergency fund, contact BALANCE. BALANCE offers free and low-cost confidential financial counseling.
888.456.2227 | balancepro.net
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