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10 mistakes you might be making with your finances

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People endeavour to keep their personal finances in order, but due to circumstance and life commitments we can never find the time to get the important things done. Let’s face it; we could all use some extra time to deal with the monotonous yet essential task of logging all our financial incomings and outgoings on a daily, weekly and monthly basis.

It’s just not feasible though: we are creatures of habit, not adaptation. There are plenty of us that want to keep our finances in order, but when dinner time comes we’d rather sit down to eat, than note down what we’ve spent the very same day.

Our need for habit and convenience in our routines far outweighs the real need for us to fulfil essential financial commitments.

Take five minutes out of your day now to see the ten things you might be doing wrong with your personal finances:

 

  1. You still don’t have a budget

The budget is a vastly underestimated tool in a society obsessed with convenience. If you don’t want to take the time out of your day to make a budget, then be prepared to suffer the consequences – even if you’re pushed for time you can still create and save a budget online within twenty minutes.

 

  1. You don’t own a savings account or have rainy-day funds

We’re all guilty of wanting the ‘now’ out of today, which is why we are usually without savings. By putting your need for something ‘now’ into your need for something tomorrow, you’ll have the security in money that you’ve saved to bail yourself or a loved one out of minor financial trouble should it befall you.

 

  1. You have way too many monthly subscription fees

If you’re signed up for a monthly cell phone tariff, that’s fine, but coupled with numerous other monthly payments like T.V subscriptions and you’ll soon be part of a vicious cycle that you can’t get out of. Always look for a get out clause before signing up to a two year contract, you never know what tomorrow will hold.

 

  1. You don’t have contents/home insurance

Fortune favours the bold, but even the bold can still be hit by unexpected emergencies and damages from time to time. If you were faced with the choice of forking out £20 now or £200 in a months time, which would you pick? That’s roughly the cost of phone insurance vs. a brand new phone entirely – if your phone gets damaged and isn’t insured, would you really want to spend wages on a new phone?

 

  1. You’re as stubborn as a mule when it comes to your finances

You know it all, but somehow you’re still struggling financially – can’t be your fault though, can it? Many people are too proud and often just too stubborn when it comes to asking for help with their finances, but know this; asking for help isn’t a sign of weakness, rather, it’s showing people that you want to do better for yourself, so don’t be afraid to ask questions if you’re having difficulty understanding something – be it financial or otherwise.

 

  1. You lend money to friends

This is a social and financial nightmare and unless it’s a really close friend, it will not end well. Lending money to a friend starts out with the best of intentions; maybe they’re behind on the rent and need a few hundred to make it through until payday. Their payday comes and goes but you still don’t see hide nor hair of your money – you meet up with them and the social awkwardness ensues followed by many excuses and “I’ll pay you backs”. Unless you’ve known the person for most of your life, it’s best to let them deal with it – you’ll be doing them a kindness as they’ll learn to manage their money more effectively the next month!

 

  1. You never buy anything second hand

Second hand doesn’t mean worn, torn and used to the point of destruction – it’s actually extremely savvy to buy second hand and you can buy just about anything second hand from cars, to games, clothes and so on. It doesn’t make you cheap in doing so if  it means your end of months savings are up because you chose to purchase some second hand goods; remember you’re long-term financial goals overshadow your short-term wants.

 

  1. You don’t have any financial plans

There’s no point getting your finances in order just for the sake of having order amidst financial chaos. A financial plan is where you can lay the foundations of your short and long-term financial goals – so you have something to work towards. I can’t stress this point enough; if you want to move forward financially, you must have a destination. Your destination can be as simple as your financial state five years down the road, for example: five years from now I’ll have saved £5,000 in an ISA. Getting your affairs in order because you’re disorganised is not a good enough reason to make a financial plan – plan because you want financial security to be part of your future.

 

  1. You’re a sucker for impulse buying

How disciplined are you as a shopper? We all claim to be a bastion of anti-consumerism, but at some point we all succumb to our vices; impulse buying like kids in a candy shop, though it’s not always candy we buy! Many gadget nerds will buy the latest tech as soon as it gets released – the fashionable amongst us will attempt to grab the latest pair of designer shoes– we could all just wait for these items to be reduced in price and buy them a month down the line when they become outsourced.

 

  1. You have unnecessary debts/debts you could have avoided

If you have unnecessary debt (yes some debt is necessary, like the debt you incur getting educated) through credit cards, store cards, catalogues or loans then you’ve already started rolling down a very bumpy hill that will become increasingly hard to climb back up if you continue living your buy now pay later lifestyle.

 

Are you still making these mistakes and do you think you can change your habits to get on top of your finances before it’s too late?

 

Daniel is a writer for Payday Angels; a U.K based lender providing clearer information, guides and interactive tools to better steer consumers in their financial dealings.


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