With the cost of living crisis continuing to rip through the UK, many of us are looking at how we can make better use of our finances during what’s going to be a difficult time for all. Of course, with managing your own finances comes a range of common financial mistakes that can leave us pondering. Whilst short term loans or small loans can support us in times of need, we’re taking a closer look at the financial mistakes to avoid and the worst financial mistakes to to avoid to help you stay on track with your finances this year.
Spending More Than You Earn
It can be easy to get carried away with spending money and forgetting important things such as household bills and mortgage repayments. The next time you go to buy something, whether online or in store, ask yourself if you can afford it, and if so, could you buy it twice? If the answer is no, consider pushing back your purchase until you can. That way, you’re not committing to something you can’t comfortably afford, recognising that you have bigger financial priorities that must come first, even if you don’t necessarily want them to.
Not Saving For Emergencies
Though it can be tempting to dip into savings, don’t get into a bad habit of borrowing from your savings account and topping it up again each month. By doing so, you’re not actually saving anything but relying on money you don’t have, which goes in hand with spending more money than you earn. More importantly, you should be conscious of your savings in case of an emergency such as if your car breaks down, the dishwasher stops working or something more serious.
Postponing Your Pension Savings
Although we are not Pension Advisors, we think everyone should save for their retirement . When it comes to contributing towards your pension, it’s important to set your account up sooner rather than later. By doing so, you’ll have a bigger sum to fall back on when retirement finally arrives, giving you greater control over the next chapter in your life. If you’re unsure, it’s a good idea to speak to your employer to find out more about your workplace pension scheme and exactly what percentage of your earnings your employer pays into it. You can then make an informed decision as to whether you want to increase/decrease your own contribution each month based on your circumstances. If in doubt, we suggest you seek independent advice
Buying New over Used Cars
Having a shiny new car to drive around in can sound appealing but the truth is, the value of your brand-new car will decline by up to 25% the moment you drive it away, reducing its resale value instantly. Instead, consider buying a car that’s three to six years old. By doing so, you’re likely to get more money back when the time comes to find a new one making it a far better investment.
Ensure You Have The Right Insurance Cover
Not having the right insurance coverage for your needs ends up costing thousands of people more money than if they were to select the correct insurance cover in the first place. When looking for insurance cover, make sure you input all your details accurately and are transparent when it comes to your needs. This includes homeowner insurance, life insurance, disability cover and medical cover, which provides you with more choice in how you receive treatment.
Taking Too Long To Pay Off Debt
When it comes to prioritising your finances, it’s important to pay off those that have more serious strings attached. These are called ‘priority debts’ and may include anything from your council tax to your TV licence, as well as your mortgage and rent. By paying these debts first, you can ensure you face no further serious actions such as court summons, helping to protect both you and your family. Paying off your debts on time will also reduce the amount of interest you have to pay, enabling you to clear your debts sooner and avoid paying back more than you initially owed.
Lending Money To Friends
We all want to be there for our friends whenever they need us, but sadly it’s not always possible. In fact, it’s one of the worst financial mistakes to make. Importantly, don’t feel guilty if you’re unable to provide your friend(s) with what they physically need. Instead, consider being by their side from an emotional perspective by listening to what they have to say and helping them seek advice if they need it. Too many of us act on the feeling of guilt, giving out money to those in need when it might be yourself who really needs it.
Failing To Budget
Regardless of the amount of money you earn, it’s always important to budget your monthly finances. That way, you can be confident that you won’t accidentally end up overspending on something when you still have bills to pay or anything else more important to buy. There are several apps available to help you budget accordingly, with some being free to download or others available for a small fee. Ultimately, this will make budgeting your finances not only more manageable, but fun, helping you stay on track.
So there we have it! The mistakes mentioned above are amongst the 10 most common financial mistakes, so make sure you don’t fall into a hole that many others have. If you need extra support when it comes to the financial mistakes to avoid, or if you require a financial boost for any reason, bad credit loans or debt consolidation loans are available to support you get back on track, especially if you are someone with a low credit score.
If you are in need of short term borrowing to cover an unexpected expense or financial emergency, we may be able to help at QuidMarket. Apply online today, and if you need further information to help with your finances, please visit Money Helper.