Getting ahead in the financial world is not easy. Most of us have bills to pay, people to care for, things to buy, and much more. However, being financially successful becomes even harder when you make boneheaded financial decisions. These can put you months (or even years) behind your goals and can derail any big plans you had. These decisions can sometimes even seem like good ones, yet turn out to be catastrophic. As a result, it is important to pay close attention to every financial decision you make. With that in mind, here are five dumb financial mistakes you shouldn’t make.
This is a tough one, as taking out loans is almost a necessity at some point in our lives. With homes and cars costing tens or hundreds of thousands of dollars, it is hard to pay for them in cash. So while loans are necessary, you can definitely make sure to avoid as much as possible the worst types of debt. Some types of debt can be sneaky and put borrowers in some major financial trouble for many years. Always read the fine print, know the conditions, possible penalties and most importantly, the interest rate of any loan you take.
Buying a home without doing your homework
Buying a home is by far the biggest purchase that most people take in their entire lives. As a result, it is not something you should take lightly. You should always shop around before finally deciding which house to buy and which bank or lender you want to borrow from. If you make the wrong choice in any way when buying a home, it can be a decision that could haunt you and your finances for decades.
Buying expensive clothing, accessories, and cars when you can’t afford them
For some reason, buying expensive clothing and items when you can’t afford them is more popular than ever. The number of people walking around in Yeezys, which were likely purchased with credit cards, is astounding. Many people feel the need to keep up with their friends or societal trends, which can lead them to buy thing more expensive than they can afford. This can be anything from clothes to watches, to cars and anything else in between.
Abusing Credit Cards
This is one of the most common financial mistakes in the world today. A large portion of people that have credit cards, simply do not know how to use them. Many people treat it as free money, but that is the furthest thing from the truth. Just because you have a huge credit limit, doesn’t mean you need to use it. Credit card debt is tough to get out of. You shouldn’t put more on a credit card than you can afford to pay off every month. Credit cards can be used intelligently, but too many people make terrible choices with them.
Simply Not Saving Enough
This is another tip that might not be for everyone, but is still something to consider. Some people literally live paycheck to paycheck. However, if you make enough to live, you should save a portion of your income. Too many times people spend all of their extra income and don’t save any for retirement, their future or their goals. Treating yourself here and there is fine, but you really should be saving at least 10-15% of your income every month, if possible.