Darren Brown | Nov 8, 2019 15:56 PM
1. FAILURE TO CREATE A BUDGET
For every 1 hour of planning, you save yourself 4 hours of execution. By creating a budget you will set “boundaries” for your hard earned dollars. This is the absolute foundation of successfully mastering your personal finances. Without a budget your money will get away from you, and end up in random places. Similar to an unmanned fire hose violently spraying everywhere and flying about in an uncontrolled manner, your money will do the same with no budget.
2. CLASSIFYING NEEDS AS WANTS
Sometimes we can get our needs and wants a bit mixed up. It takes some serious financial self scrutiny to honestly identify the difference. Examples of your basics living needs include: shelter, food, clothing, transportation, and power. If you have a car that’s in good working order a brand new car isn’t a need. Before making any decision to spend money ask yourself do I need or want this?
3. NO EMERGENCY SAVINGS FUND
Life always finds a way to strike at the worst possible time, but when it does will you be prepared? An emergency savings fund acts like the shocks in your car. When you hit a bump in the road the shocks buffer the impact and allow you to keep moving along smoothly. Next to having a budget this is definitely the second most important strategy on your road to Financial wellness. Save enough cash to cover 6 months of living expenses. Try saving just 10% of your paycheck each time that you get paid and it will build up in no time.
4. NOT ENOUGH FUN MONEY
Have some fun! Don’t set your budget to the point that you don’t have a reasonable amount of money for entertainment. If you cut your self too short in the fun category it’s likely that you will dip into savings or charge your credit card when it’s time to party. Also keep in mind when setting your savings goals that you still have to live.
5. SMALL CHARGES AND SUBSCRIPTIONS
Back in the day the small charges were mostly things like a coffee here and there, a little fast food, or maybe even a small item of clothing. With thousands of subscription based apps and media extras it’s easy to rack up hundreds of dollars in small subscriptions. Make sure that you track and budget ALL of your subscription charges. These small charges can add up to significant dollars over the year.
6. NOT PROPERLY TRACKING EXPENSES
Even if you have created the perfect budget it’s all for nothing if you are not tracking your expenses. Tracking your spending is the ruler used to measure how well you are meeting your budget. Advantage Financial Consulting has the best expense tracking software on the market. AFC takes it a step further and actually has a live agent to make sure every single charge is properly categorized and fits in your budget! Check them out at http://Advantagefc.com
7. OVERPAYING FOR PRODUCTS AND SERVICES
”My mama told me you better shop around” – The Miracles. We get so used to paying the same amount for our bills and services that we fail to look for a better price. The number one area that people over pay is auto insurance. Regularly price shop for everything that you spend money on every month.
8. RELYING ON CREDIT CARDS
Overuse of credit cards are bad news for your bottom line. Responsible use of credit cards have many great benefits. If you keep credit card use low that has a great impact on your credit score for example. If you have to use a credit card each month in order to pay your bill let’s consider a different option. Immediately switch over to a strictly cash based budgeting system. At no point should you rely monthly on credit card.
9. WORKING TOGETHER WITH YOUR SPOUSE
A couple that is on the same page financially is a force to be reckoned with. Having a double source of income is awesome if you are both on the same. Even if there are not two sources of income working as a team is huge. Imagine a row boat with each person paddling in the opposite direction….I think you get the picture. Take the time to discuss goals, plan and commit to an action plan together.
10. SPREADING YOURSELF TOO THIN
So you are saving for a down payment on a new home, maxing out your 401k, saving for all your kids college fund, saving for vacation, saving up towards building up your emergency fund, donating to your local church or community program, all while paying monthly bills and paying down your debit. Realistically it’s just too much. Unless you are an extremely high income earner you will not be contributing enough to make much of a difference in all of these categories. Your cash only goes so far at the end of the day. Spreading yourself this thin is not good. Pick just a few very important goals to accomplish. Once you have completed those goals then move on to the next.