Financial problems are something that can happen to anyone. Many people feel sad and low because of their financial situation. One of the main reasons why financial problems occur is mainly because of the mistakes that people make while handling their finances.
Here are top three reasons on the mistakes people commit while handling their money:
Mistake No.1: Spending more money
People spend a large amount of money on things that are really not very important. For instance, some people may renovate their house even though it the present condition of the house is good but not attractive. After the house is renovated or purchased, they may spend more money in making the house look beautiful.
Impulsive buying habits are also one of the factors that result in spending too much. People who make use of credit cards spend on buying stuffs online or at retail outlets thinking that they will repay on time. However, they often fail to do so and end up becoming victim of pending debts.
The only way to deal with it is spend your money wisely. Do not buy things unless you are in really in need of it. Your expenditure should not exceed the amount of money that you earn.
Mistake no.2: Spending without keeping tracks of expenditure
If you are not aware of the pending payments or bills that are overdue, you may end up spend up more money. The more debts you have against your financial company, the lower your credit score will go. You will end up paying excessive penalties and high interest while paying back the money. Even if you are late by a day in making your credit card payments, you will be charged to pay a hefty late payment fees.
You can keep your finances under control by keeping tracks of your expenditure. A simple way to do is to make four columns namely assets, debts, income and expenses.
Start listing down the assets that you own with its value in the ‘assets’ column. In the ‘debts’ column, list down the money that you owe including the interest rates and due dates. In the third column ‘income’, list down all the sources through which earn money. Lastly, in the fourth column ‘expenses’, you need to list the amount of money that you spend on your necessities like food, travel, clothing, etc.
At the bottom of all the four columns, you need to make the total. Once you have done this, you will be able to keep track of your incoming and outgoing money.
Mistake no.3: Not following a plan
If you do not plan your expenses, you may end up selling your assets to get your finances under control by clearing your debts. You may even have to search for a new job or a part-time that will help you earn more money.
The solution to this problem is planning your expenses well and cut down on all the expenses that are unimportant. Rather than having your meals outside, you can prepare lunch at home and save substantial amount of money at the end of the month.
Most of us make the above mentioned mistakes. Now that we have the solution in our hands, why not take advantage of it and take care of our finances.