It can be easy to make mistakes with your money which can mean that you do not have as much as you would like. Sometimes we do things through habit and do not really think about whether these are sensible things to do. Below are five mistakes that many people make, which can be avoided to make you financially better off.
Not Paying off Debt
If you have debts then you will usually be paying a lot of money in interest. This can add up over the months and years and you will have nothing to show for it. Whatever you bought with the money that you borrowed will have cost a lot more than you bought it for, if you add on the interest to the price of the item then you will paying many times more for the product. Even if you just pay a very small bit of money off at a time, it can make a big difference in the long run.
Not Saving Some Money
If you have debt, then it is more sensible to pay that back rather than saving money as you will save more money in a reduction in interest payments than you will gain in interest on the savings. However, if you do not have debt then it is wise to save some money each month. This will allow you to have something put by for an emergency and may save you having to borrow money to afford to cover the cost of that emergency. It can give you a sense of security as well, knowing that you have that money there.
Spending all Spare Cash
There are some people that feel like spare cash burns a hole in their pocket. They feel that they need to spend the money while they have it because once it is gone they will not be able to buy anything. Although it is true that you cannot spend money when you do not have it, it is wise to make sure that you have enough to cover all of your necessities. If you have some spare money then it can be a good idea to keep hold of it, just in case something comes along that you need to pay for. If you have money left when it is pay day then you can save it and then spend it if you need it in the future.
Not Comparing Prices
Many people do not bother to compare prices of things when they are shopping. However, it is worth comparing prices on everything that you buy. This does not just mean financial things, where people often use comparison websites to compare prices but every single thing that you spend money on. It will take time, but you will find that you will save a significant amount of money if you do this and you will soon get used to doing it so it will not take that long.
Not Saving for Retirement
One of the biggest mistakes that people tend to make with regards to money is not saving towards retirement. Many people feel that they cannot afford to do this, but retirement can often cost the same as your working life but with a much smaller income. It is therefore really wise to give it some serious though. You may assume that you will inherit money or be able to sell your home, but this may not be enough. Even if you downsize or sell completely you will only be able to buy a small pension fund and if you decide to just live off the money and not but a pension fund at all it may run out even more quickly. Consider what your home is worth, how much you spend each month and how long you could afford to live off. Even if you have a £250,000 home and spend £1,000 a month you will only have just over 20 years of money. If you retire at 70, this only takes you to 90 and you may need to find money for a care home or want to have holidays etc. You will also have nothing left to leave your children.