Most people are generally optimistic about their finances. According to a poll conducted by the National Foundation for Credit Counseling, more than 56 percent of people think that they will be in a better financial position next year.
The problem is that the facts don’t agree with them. 47 percent of people live paycheck to paycheck, and that number isn’t going down – it’s going up.
Part of the reason why you don’t have any money has to do with the economy. But part of it also has to do with your own habits. Here are some newbie mistakes you’re making with your money.
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Mistake #1: Thinking Budgets Are Evil
When most people hear the word “budget” they think “restriction” or “killjoy.” According to a study by the NFCC, more than 60 percent of respondents said that budgets were a restriction.
Unfortunately, those people are probably right. CNN contributor Christine Romans says that going on a budget is a little bit like going on a diet. You’ve got to cut out the calories by cutting down on your frivolous spending. And you’ve got to stop stuffing yourself with cake to make yourself feel better, just like you’ve got to stop going out shopping to get a buzz.
Romans says that once you’ve gone on a budget, you’re more likely to feel energetic and feel better, not having to worry about money so much and whether you’re spending too much.
Mistake #2: Not Taking Bills Seriously
According to the NFCC, one in three people don’t think twice about carrying their bills over from one month to the next. But this problem with this is that it increases the interest rate you pay whenever you want to take out money, thanks to the effect that it has on your credit score.
One approach is to look for ways to reduce your monthly expenses. Find the best mobile phone deals you can and go on price comparison websites to see whether there are any opportunities to save on your utility bills.
On average it takes about 10 minutes at you could save more than £500 in total on your bills.
Mistake #3: Avoiding Money Conversations With Your Partner
According to the National Marriage Project, disagreements over money can be a disaster for your relationship. Couples who have no money in the bank are 70 percent more likely to divorce than those that do. Romans says that is it critical not to avoid having money conversations with your partner. You need to discuss everything, like the loans you owe to the bank, as well as each other’s spending habits. Often one person in the relationship spends money at the expense of the other, increasing resentment and causing relationships to deteriorate.
Mistake #4: Failing To Invest
Finally, one of the biggest problems people make is not investing enough of their money. Warren Buffett once said that investing today is the best way to receive more money tomorrow, and he wasn’t wrong. The wealthiest people in the country get about 30 percent of their annual income just from their investments and savings. [/fusion_builder_column][/fusion_builder_row][/fusion_builder_container]