People often end up having to deal with huge economic hardship because they make some financial mistakes. Contrary to what many think, no matter how good you are at managing your finances, it is possible that you make a mistake that ruins everything and lands you in financial trouble. Due to this, you need to realize that everyone makes mistakes. According to an experienced bankruptcy attorney, the following are those financial mistakes that you will most likely make at least once in life.
You can have a huge fortune and still lose it simply because you spend too much money in inappropriate ways. For instance, it might not seem like a huge thing that you buy a double cappuccino and take advantage of office takeaway but if you do the math at the end of the week, you will notice how much money is spent on things that you do not really need.
Think about the fact that if you spend $25 every week on restaurant meals, during one year this mounts up to $1,300. This money can easily be spent on your mortgage payment or can be put in a bank account to help you be safeguarded against potential future financial hardship.
Paying For Things You Do Not Use
Countless families around the world have cable TV and pay for it every month. If this is your case, think about whether or not you actually watch TV. You might be paying for a service that you do not use.
Various things, like gym memberships, music services and cable television can be paid without being used. In the event that money is tight, a simpler lifestyle can help you deal with the hardship.
Using Too Much Borrowed Money
When you use your credit cards to buy items, you quickly get used to the action. The problem is that most of these cards bring in huge interest rates. They are practically extra money that you need to try to avoid paying.
Living on money that is not actually in your possession is one of the most damaging financial management mistakes people make these days. Because banks give us easy access to cash, we tend to use it. However, when you use money from a credit card, you use money that you do not actually have. This means such cash should only be used when it is mandatory, not as a luxury.
Buying New Cars
The appeal of buying a new car is obvious but what many do not know is that the car loses value just after it is first sold. This means that you can easily find great used cars that are in perfect working condition and that cost at least 30% less than the price of a new vehicle.
Things become even more damaging if you borrow money when you try to buy a new car. You end up paying interest for an asset that does not grow in value. The difference that appears between price and value keeps getting higher.
The money that you have should not stay idle when you do not need it. There are countless different income-producing investment opportunities that can be used right now in order to make your money produce more money. As an example, you can take advantage of the effective tax-deferred retirement account and the employer-sponsored plan. You just need to fully understand how long the investments take until they become profitable and reach a suitable growth. If you do not know anything about investments though, talk to an experienced financial advisor. He/she will help you make a smart decision.