What are the top financial errors people make?
Financial mistakes are pretty common. As much as everyone wants to be in control of their finances, life has a way of getting out of control. Sometimes, it just takes one small mistake. Other times, a series of chronic mistakes cause the problems. What are some of the most common errors people make? A few are listed below:
- Frivolous and excessive spending: People simply spend more than they can afford. They make too many impulsive decisions. They buy things that they want, but do not need, even if they can’t afford them.
- Maxing out credit cards: When used like debit cards — by paying them off every month — credit cards can be helpful. When you constantly use borrowed money and do not pay it off, though, then you have to pay high interest rates. This makes all those purchases far more expensive then they should have been.
- Buying things they can’t pay off: It is one thing to have 12 monthly payments to pay off a new couch and quite another to endlessly pay for something you can never pay off and never own. With too many of these agreements, it can ruin your budget. Common examples are cable TV and gym memberships.
- Buying as much house as they can afford: If you max out your budget to buy your house, do you have anything left over? Many people buy the biggest, most expensive house they can, and then one financial problem — unexpected medical bills — is too much to absorb.
Have you made these financial mistakes? It is important to know all of the legal options you have to seek out a fresh start.