Money concerns are something that impacts most of the world’s population. Worries about saving for a property, paying your energy bills or falling into debt are among some of the main ones. With the current cost of living crisis, these issues are now more wide spread as people find themselves scrimping and saving to get by.
While prices are currently sky high for energy bills and everyday essentials like food, people’s less than ideal financial circumstance are often a result of common mistakes that can be avoided. There are many traps that people can fall into with their money, and we’re here to help.
To avoid making more financial mistakes and make your future brighter and better, follow our tips.
Do not rely on your overdraft
Your overdraft should be used as a buffer for your finances and not for enjoyment. Being in your overdraft often requires you to pay small amounts back to the bank until you’re out of it. Making use of your overdraft can be risky as you may exceed your overdraft limit without authorisation which could lead to hefty repayment fees.
Not monitoring your credit score
Your credit score is one of the most important factors when getting a loan, so it’s wise to keep a close eye on it. This score indicates to lenders how trustworthy you are with credit, which is why It’s a good idea to take time to learn how you can improve your score, especially if it’s low.
While there are different options you can look into if you do have a bad credit score, it’s best to keep on top of your score to ensure you get the best interest rates when you apply for credit.
Plan for the future
The future is unpredictable, which is why it’s important to manage your finances to the best of your ability and build your savings. This means putting money from your salary aside which can be used for emergencies or large life events like buying a house or a wedding. A great way to save is to use the 50/30/20 rule which is a realistic budget. This means:
- 50% for your needs
- 30% for your wants
- 20% for savings
Avoid frivolous spending
One of the easiest ways to make mistakes with your money is to live beyond your means and spend money on items you really don’t need. Make sure you consider your finances before you purchase any item that isn’t essential to avoid unnecessary spending.
Try to avoid opting out of your workplace pension scheme
Your pension scheme is the easiest way to build your finances up for the future. Often when you start a new job, you’ll be asked if you want to opt-in or out. Those on low wages may feel as though it’s not worthwhile but it all adds up. Don’t make a short-term gain and hinder your future.
