Nobody in the world is perfect. Everyone’s just trying their best to muddle through life as best they can, but this inevitably means that people will make mistakes. One of the most common areas in which this happens is personal finances, but that also happens to be one of the most potentially dangerous areas in which to make mistakes. After all, one serious slip-up could be the difference between solvency and ruin. Here are 10 crucial financial mistakes you might be making, and how to correct them.
1. Taking out the wrong loans
Far too many people take out loans before properly researching the lender or the terms of the loan. We understand why; desperation leads people to make decisions before they’re truly ready. However, there are so many online personal loans available out there now that there’s really no reason not to do thorough research before making a decision. If you’re going to take out a loan, you should read through everything as carefully as you can before finalising the deal.
2. Buying everything new
No matter what you’re buying, there’s a very, very good chance you can get a better deal on it used. Whether it’s consumer tech, entertainment media, or vehicles, you’ll almost certainly find the thing you want cheaper if someone else has previously owned it, and this stands even if there’s barely any mileage on the clock. This doesn’t apply to everything, but there are lots of things you should always buy used if you have the opportunity to do so.
3. Not having savings
This is another area in which we have a lot of sympathy for many people. Sometimes, it’s just not possible to save money, especially if you’re living from paycheck to paycheck. Almost half of UK citizens don’t have savings, but if you’re able to put some money away every month, you definitely should. We can’t know what might befall us tomorrow, and it’s always good to have money in the bank to deal with any eventuality that might arise.
4. Not changing jobs
If you love your job, this one isn’t aimed at you. However, if you’re stuck in a rut and you don’t see a way of improving, then it could be time to change your job. You may not be doing so because you’re scared of the uncertainty this brings, but there are ways to prepare for changing your career and maintain your finances at the same time. Changing your job could be the best decision you ever made, so don’t let yourself fail to fulfil your potential because of fear.
5. Too much borrowing
Once again, some people can’t avoid the amount of borrowing they have to do, and falling into that financial trap can be very dispiriting. However, if you’re someone who has ample savings and you’re still borrowing to cover expenses, then you’re actively damaging your finances. You should only borrow if you absolutely need to; otherwise, it’s worth dipping into your own financial reserves, simply because this will result in a better credit score and better overall financial health.
6. Not creating a budget
Trust us – without a budget, you’ll be adrift sooner or later. You need to know the exact shape of your finances and how you’re going to manage your spending from month to month. Sometimes, this information can be hard to face up to, but creating a budget is vital if you want to maintain good financial health. Sit down and work out all of your incoming and outgoing money, then create a budget based on this. Make cuts if you have to; it’s all in service of your financial security!
7. Making snap decisions
Whether it’s impulse buying or taking out a loan because of fear, making snap decisions is the enemy of sound financial health. Sometimes, an unexpected drop in your fortunes can cause you to panic, but this is the worst possible time during which to make decisions that will have lasting repercussions. Let yourself calm down, talk to those around you, and try to formulate a plan as calmly as you can. Never, ever make decisions on the spur of the moment when it comes to money.
8. Using “buy now, pay later” services
“Buy now, pay later” schemes might seem like a good idea at the time, but the truth is that they’re often simply ways for companies to fleece you for extra money. If you can afford it, it’s almost always best to pay for something outright, because then you won’t have any hidden costs associated with what you’ve bought and you can simply enjoy it with no strings attached. Sometimes, you may not be able to avoid using “buy now, pay later” services, but try not to do it as a matter of principle if you can.
9. Buying branded goods instead of own-brand
Most supermarket own-brand goods are just as tasty or functional as branded products, and they’re often significantly cheaper. The next time you’re whizzing around your favourite supermarket or doing your weekly online shop, try filling your basket – virtual or otherwise – with own-brand goods. You’d be amazed at how little a difference this makes in terms of your experience, but how much heavier your wallet feels when you make this change.
10. Never changing providers
Switching your provider – whether it’s for energy, internet, or any other service – is actually incredibly easy. It benefits companies to pretend that it’s an incredibly arduous process, because then you’re less likely to want to hunt for the best deal and you’ll probably just stay with that company, spending more than you need to. However, if you want to save money, you should be switching providers whenever it financially benefits you to do so. It’s easy – you can even do it via text in many cases!