Before You Borrow: What to Know About Taking a Loan
While it may seem difficult to create a large cushion of emergency savings, you can set small goals and gradually increase them. The positive motivation you experience by reaching those goals can help you keep up the pace and eventually reach your bigger goal.
If you’re expecting a tax refund
this year, don’t waste it! Instead, save the windfall by padding your emergency
savings, or use it to pay off credit cards, make a lump sum debt payment or
invest it for retirement.
The money decisions you make can
have a major impact on your financial future. Some decisions help you build
wealth, while others may cost you dearly down the line.
Even financial experts make
mistakes, but that doesn’t mean they’re impossible to avoid. Learn about 7 of
the most costly money mistakes and how to avoid them.
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1. Failing to Create a Budget
Failing to create a budget can be
one of the most costly mistakes that people make. Without a budget, it's
impossible to know where your money is going and how much you should be
spending. It's also difficult to track your progress and stay on track toward
your financial goals.
Another reason why many budgets
fail is that they try to implement too much change all at once. This
all-or-nothing approach is often doomed to failure because it's unrealistic and
almost guaranteed to backfire. Instead, it's better to cut expenses gradually.
Start by tracking your spending and then making small changes, like cancelling
an unnecessary membership or negotiating your car/home insurance costs.
Finally, it's important to build
in a spending cushion and set aside an emergency fund. This way, if you do
happen to overspend in one category, you'll have the funds to cover it.
Otherwise, you may end up borrowing or using credit cards, which can be a costly
mistake in the long run. If you receive a tax refund, consider using it to pad
your emergency savings, pay down debt, or invest for the future. This will help
you stay on track and achieve your financial goals.
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2. Overspending on Cars
One of the biggest money mistakes
people make is overspending on cars. This is because cars are expensive and
depreciate quickly, which means they are not the best investment for most
people. This is especially true if you finance your car, which can lead to
expensive interest payments and a big debt burden.
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