Once you get your paycheck and pay the necessary bills, there probably isn’t much leftover after that, finding yourself wondering where it all went. It can be tough to handle the household finances. After all, money can be one of the most stressful things to come about in a relationship, which is probably why money is always a leading cause for divorce. If you don’t make the right money moves, you are not only affecting what happens now, but also your future, which you need to make sure you have enough to live off of during retirement, when you are ready to give up the regular paychecks and live off what you have saved during your working career. So, if you aren’t careful, you can go broke pretty quickly by making the wrong money movies.
Putting All Purchases on a Credit Card
While credit cards can be great when it comes to fraud protection and the rewards that go along with making purchases, such as airline miles, points, or even a check back once a year, racking up a credit card balance can be scary and could ruin you financially. While some can put all purchases on a credit card to build up the rewards, others may not want to take risk if you are likely to keep charging more than you can pay the full statement balance and would start paying interest, a downward spiral afterwards.
Trying to Keep Up
Living beyond your means is really summing up when you are spending more than you are taking in, but if one of the reasons is trying to keep up, then you need to reevaluate your priorities. We all make different salaries, so some may be able to afford more than others in our family and friends circle, so you should only be spending what you can comfortably afford, and worry less about keeping up with what others are spending. The truth is, maybe they’re doing the same and overspending the same.
Being House and Car Poor
Speaking of overspending to put on a show, that can be said about how much you are spending on your home and automobile. While experts have said that you should stay around 30% of your income being spent on housing, if you are able to stay below that, you are for the better, which would free up extra money to stay out of debt and save for your future. If you are able to lease a modest car and have an affordable mortgage, you can have extra money to enjoy life experiences, while others are forced to stay inside in the home they can barely afford.
Not Having an Emergency Fund
Another way to go broke pretty quickly is to put an unexpected charge on your credit card that you don’t have the money for right now and will likely not be able to pay back in the near future. You never know when you will have an auto repair or home appliance need fixing, let alone having an unfortunate job loss, so you want to be as best prepared as you can, and an emergency fund of a few months’ worth of expenses could solve having that extra cushion to have just in case.
Ignoring Saving for the Future
While having an emergency fund will protect you for the unexpected, what you cannot ignore is retirement, which you know when roughly that will be and how much you need to be able to keep up the same lifestyle, so the earlier you can save, the better off you will be in the future. Take a look at your employer’s 401k account to see if they match any contributions, as that would be a good place to at least make sure you are contributing the max they will match, otherwise that would be like leaving free money on the table otherwise.
Avoiding Learning from Mistakes
No matter what we think to ourselves, we always don’t have all the answers, and should be learning as we go. It’s ok to make mistakes along the way, as long as we learn from them. If you have a problem with credit card debt, when you finally get out, if you learn your lesson and put the credit card away you are in good shape, but if you go back to your spending ways, it will be a vicious cycle of debt. It’s always a good idea to seek out the opinion of successful family or friends that you trust, not to mention a professional.