Monday, September 17, 2012

Basic Money Mistakes to Avoid

Most people worry about money—but you don’t have to let your worries ruin your life…not now and not when you’re older (and have more money). You can help your financial situation (and lessen your worries) if you avoid some basic money mistakes.

Mistake: Not tracking your spending.
What You Should Do: Pay attention to where your money goes. Remember to track all the incidentals you pay cash for. When you have a credit card, your credit card statement will help you track your spending. If you use a debit card, write the date, amount spent, and the name of the store.
Benefit to You: Tracking your spending will help make it easier to stick to your budget. You’ll see where your money is going—and you can make changes right away if you see that you’re wasting money.

Mistake: Not setting up a budget (and sticking to it). This advice may seem elementary, but many smart people don’t take it seriously.
What You Should Do: Determine how much money you realistically need to pay bills and buy needed supplies for a week or month, and don’t go over it.
Benefit to You: You will be in charge of your money—and with that accomplishment comes a good feeling—not that frantic, sick-to-your-stomach feeling that you get when you realize you don’t have enough money.

Mistake: Not setting up and maintaining an emergency fund.
What You Should Do: Set aside some money for emergencies, and don’t touch it for any other reason. You can get in this habit now by setting aside small amounts of money. Do this and you can start building your emergency fund before you move into your own place.
Benefit to You: Ten or 20 dollars a month can add up, especially if it’s drawing interest.

Mistake: Not shopping around.
What You Should Do: Take the time to look for the best prices, and avoid buying on impulse. Stock up on essentials on sale, and always look for opportunities to negotiate a better deal.
Benefit to You: You’ll get the best deal that’s available, so you’ll spend less money. That’s money you can save. (How about putting the saved money in your emergency fund?)

Why Bother Now?

But, you’re young! Why should you think about any of this now? Well, we’ve said it before (and we’ll probably say it again): the sooner you learn good money skills, the better off you’ll be! Learn these skills now while you’re still living at home. That way, if you make a mistake (think: I spent too much on clothes and now I can’t afford books), your parents can help you fix it—and it likely won’t be as serious as when you’re on your own (think: I don’t have enough money to pay the rent on my apartment).

What about you?

How well are you handling your money? Do you have a budget—and do you stick to it?

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