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How To Avoid 3 Most Common Money Management Mistakes

June 23, 2017 Financial No Comments Email Email

Old economic saying is that you are nowhere near to being rich if you have to constantly count your money.

Therefore, if you are still counting it, you don’t have sufficient amount yet. On the other hand, path to measuring money instead of actually counting it is hard and requires a lot of money management. It has to do with your organization and suppressing your own money-spending consumerist machine that lies inside of you. Here we have some common mistakes when it comes to money management and some tips on how to recognize and deal with them.

  • Overspending on unnecessary things

Only when we don’t have enough money for an everyday spending is when we start to calculate on our budget. But, behavior usually changes when we get in possession of rather larger amount of money, ie., when we have more money than we actually need. One of common mistakes that people make in situations like this is, you are guessing it already – overspending.

Yes, it is in human nature to overspend on some items that have some prestige and are of certain value for us. After all, this is what money is made for – buying things. No one will judge you if you spend a buck or two buying another pair of jeans from your favorite jeans designer or spending a thousand or two more for your favorite brand of hi-fi sound system. But, don’t get carried away! Sellers are sharks in the water, they can taste blood quicker than you think and, before you know it, you will end up with bunch of things that you overpaid for and you don’t actually need.

        Remember how you sticked to your list when you didn’t have enough money to buy everything you need? Remember how you prioritized then on what to buy today and what to buy tomorrow? Apply same strategy here again. Make list, prioritize and get in where you fit in.

  • Putting too much money aside

Having an emergency fund is one thing, but having too much money put aside is a whole different story. Those of us who remember all the recessions and economic rundowns and inflation twists know very well how important it is to have fresh cash available on-hand in case of emergency. But, it has become common for some people to put large chunks of money aside for possible emergencies when there is no need for them to do so. There is also one important thing that you should be aware of when keeping money in your own stash for too long – inflation. It will literally eat up your money during course of time so you should learn how to take hold of it and act proactively on managing inflation.

What you can do with excess of your money is of course save for retirement. Putting money in retirement funds was never a bad idea. So, instead of losing money to inflation, it could prove a good bet if you learnt how to plan your retirement and start working on it today.

  • Using credit cards excessively

Maybe the most common mistake people actually make is using credit cards too often. This is another neat banking trick, making money available anywhere and anytime, but you should really be aware on how using credit cards for small transactions can seriously harm your budget in a long way. If you have cash in your pocket, it is probably wiser to pay traditionally using cash. Lots of credit card uses for small everyday purchases can accrue to large monthly expenditures and there are also fees associated. I advise you looking into your bank statement and checking out how much money are you putting in your bank just by paying for everything using your credit card. You would be surprised how much money you can save just by restraining a bit from reaching out to your Amex.

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