How good are you at managing their money? For instance, if you were asked without warning for a breakdown on the state of your finances, would you be able to provide one? The answer may well be yes, but it’s also just as likely to be no. Managing your money is important no matter how much you earn, so it’s worth doing whatever you can to avoid the common mistakes that people make with their money.
Take spending as an example. There are always going to be things we need to spend money on and many instances of expenditure can’t be avoided, but there are also many things that we don’t need and yet we buy anyway. That deluxe package of TV channels we never watch, for instance, or a new car when our old one is actually perfectly fine. It might be nice to buy new things and buy ourselves the very best if we have the income to do so, but it is often more beneficial in the long run to hold back and look after our cash instead.
Spending money we don’t have is another common mistake that many people make. Often, this happens on a relatively small scale, such as by spending on a credit card and then paying it back over the course of a few months rather than in one go. Other times, though, people spend money they don’t have on a much larger scale. This is something that needs to be avoided at all costs, as it can have a detrimental impact on your credit rating and get you into trouble with the debt collectors – something that naturally is best to avoid.
Investments are another area where money mistakes are often made. If you invest wisely, of course, there is absolutely nothing wrong with making investments and they can bring excellent financial benefits. However, get it wrong and you could potentially lose everything. This means that investing in ventures you don’t really know anything about or buying shares in particularly risky companies might not be the best idea. There are alternatives available, such as well-managed mutual funds that could provide a better option. Seeking independent, impartial financial advice is always a good idea if you’re considering investing so you know you’re not getting ripped off.
It’s also worth looking at issues such as insurance. Let’s take home insurance as an example. This is something the vast majority of people need to have and so is very important. There are, however, a couple of mistakes people make when it comes to buying house insurance. One is that they aren’t adequately insured, which means that if they do need to make a claim, they might not be able to cover their costs with their policy.
Another mistake is to be over-insured, which means you might be paying more than you need to for your insurance. Getting accurate quotes for your home insurance – and quotes for anything else you need to have (such as car insurance or energy bills) – is important when it comes to getting a good deal and avoiding common mistakes that are made with money.
Guest Post by James