Ensuring that you manage your money effectively is essential. Mismanaging your personal finances can have a huge impact and mean the difference between being able to meet your commitments and not. Even if you have some financial flexibility, mismanagement could mean you struggle even though your income should be sufficient to meet your needs.
Here we look at some of the most common personal finance management mistakes made.
1. Overspending or spending frivolously
It can be tempting to splash out in the heat of the moment or convince yourself that you need the designer upgrade. However, if you stop and ask yourself if you really need that item each time you are tempted you will find that you spend less, freeing up funds for important purchases.
2. Failing to shop around
Maintaining loyalty to big corporations such as broadband and energy suppliers can be expensive. According to the Citizens Advice Bureau, loyalty to providers is costing consumers significantly.
3. Not taking independent financial advice
An independent financial advisor is a trained professional with comprehensive market knowledge and access to special software for financial advisors, such as that found at https://www.intelliflo.com/financial-adviser-software. They are experts at helping you to find the best deal for your large purchases that suit your individual financial circumstances and requirements.
4. Living on borrowed money
It can be tempting to get a loan to get a new car or perhaps put in a new kitchen. However, if these aren’t essential you could end up paying more than you need for them if you get a loan. You will always pay more when buying through a loan as there will always be interest to pay.
5. Lending money to family and friends
We all like to help out family and friends when possible but make sure everyone is clear on the terms to avoid problems. Arguments can go on for years as a result of a misunderstanding of when, how or even if money is to be repaid.
6. Not saving
It can be tempting to live from one pay day to another, but this leaves nothing for emergencies. Try to save from every pay cheque, even if it’s only a small sum. Then if you need money in an emergency you won’t have to get tied into an expensive loan unnecessarily.