We all love to brag about the Rolex watch you just bought or that shining new Diamond jewelry on your neck. However, often, at times, in order to go for these expensive possessions, we tend to forget our finances and end up regretting all these swanky purchases when the credit card bill is delivered at our doorstep. Well, there’s a reason why an average credit card bill of an American is $6,194.
You surely don’t want to be in a place like that. So, read this think-piece carefully and never commit these 6 expense management mistakes people often make:
1. No Idea where the Money is Going
Did you ever think how your wallet keeps getting lighter every day, till you hit the ATM? Or, how you keep on receiving so many OTPs or so many account balance deduction messages in your Inbox?
To be honest, only a few of us ever think of the way we spend and most of us fall in the trap of marketing gimmicks and end up spending a lot.
Irrational and impulsive buying has eaten up our minds and wallets irrationally. If this pandemic had not hit us, we would have not completely realized how much we spend on things other than necessities. The lockdown helped us contain our spending habits by limiting our expenses to just basic necessities.
2. What’s a want and what’s a need?
This is like a dilemma each one of us face when we blatantly staring at the glass walls of shopping malls, or even our mobile screens.
You spot a dress, try it, find it gorgeous and buy it. We hardly ever ask ourselves “Do I really need it?” Hence, making a list of wants and needs is where most people fail to spend wisely. A packet of Breakfast Cereals is a need, however, the priciest bottle of wine is a Want.
If you are not well aware of your need and wants, you will be spending incessantly. If not checked earlier, it will further compel you to make rash use of your credit cards, and on the failure of its repayment, it will ruin your credit score, with higher interest rates in Loans.
3. Credit Card is the answer to all questions
A lot of us have a habit to abuse our credit cards. We tend to buy everything that reaches our eyes and feel guilty when you need to pay the bills. Credit Cards are like the idiom “Counting your chickens before they hatch” come true!
At times, this has also led to people making faulty investments. Once an investment is a bad investment, there’s no way back from it.
4. Debt in Collection
Common people also have a habit to lend loans to someone else thinking it would either be put to good use or help them produce great returns with a hope that it will be returned. But unfortunately, this world is not so genuine. Most people fail to return your hard-earned money.
In that case, you can always look for an International Collection agency that can help you realize those debts, which had otherwise gone bad.
5. Do we have a Plan for our Money?
You wouldn’t be here reading this if you had a solid plan right from the beginning. Yes, there’s something called financial planning, which we think is rocket science. However, it is not the case. Financial Planning is all about understanding your needs and carefully allocating funds to it.
Without planning in place, we do not seem to realize what is the agenda for this month’s salary. Or, in better put ideology, how will the salary be spent and how much will be saved for next month. Use tools such as Synel expenses management solution to eliminate paperwork.
6. Pay Day is here!
Well, the joy seems no bound when the payday arrives. This is solely because our habit is to live from one paycheck to another. It’s good to live in the present but not at the cost of your future security. So, to dodge the harmful effects, decide a ratio at which you will distribute your income in expenditure and savings.
Over to you…
Now that you know what is making your finances all shaky, make sure you never commit these mistakes. Trust me, a poor financial position is not a good condition to be in. If not handled well, it will put you in a debt trap from where it is almost impossible to reverse.
Image Source: Pexels.com