This financial problems solutions post comes via our contributor, Bola Sokunbi, founder of Clever Girl Finance. A Certified Financial Education Instructor, money expert, CEO, and best-selling author, Sokunbi aims to help women like you take charge of your finances, stop living paycheck to paycheck, build real wealth, and get you in control of the life you really want to live.
Wondering if you’re on top of your money goals? It’s a good idea to cross-check your goals against this list to avoid the most common money mistakes people make every day that could possibly be costing you thousands of dollars! Read on for potential financial problems–and solutions!
Mistake 1: Depending on credit cards
It’s no secret that the average American carries thousands of dollars in credit card debt. In fact, each household carries $8,248 of consumer debt on average. While it may be sold as easy money, credit card debt can quickly grow beyond your original spending limit and this is because of the interest it accrues. Paying interest can get really expensive and keep you stuck in the cycle of debt because it gets compounded and then compounded again every month that you don’t pay off your balance in full.
If you have any unpaid credit card bills, make it a priority to pay them off quickly to save yourself tons of money in interest payment that you could put to better use–like your savings goals!
Mistake 2: Neglecting to check your bank statements
Your bank statements provide you with insights as to how you are spending your money, especially when it comes to things like online subscriptions and convenience spending (like eating out) which can both be a double-edged sword. On one hand, convenience spending can make living your life so much easier, but on the other hand, it can get really expensive especially if you don’t use or love what you are spending your hard-earned money on.
The easiest solution to this financial problem is to check your monthly bank statements to keep an eye on your spending habits and also to catch any errors or unexpected charges. It will take all of 5 minutes and will help you save!
Mistake 3: Delaying plans to start investing
No matter how hard you work, if you don’t have investments in place that are generating returns for you, you’ll need to work forever.
Solution: Start exploring retirement account options through your employer that will allow you to make monthly contributions. If you’re unsure of how to get started, you can consult a financial advisor who will discuss your financial goals and tolerance for risk.
Mistake 4: Not creating a monthly budget
Want to learn how to manage your money like a pro? The best starting point is to get into the habit of budgeting. It will help you to know where your money is going, track your savings goals and guide your spending towards the things you truly care about.
That being said, budgeting doesn’t have to be boring, build some fun money (within reason) into your budget each month. You can spend this money guilt-free, without derailing your other financial goals. Be sure to create a new budget in advance of every month as no two months are the same. If you want to know how to get started with budgeting, you can learn more here.
Mistake 5: Buying more car than you can afford
The idea of buying a brand-new car sounds enticing, and when you go to a dealership, you can rest assured that the salesman will present you with many options. But the reality is, buying a brand new car that you can’t pay for outright in cash can get you stuck with higher than necessary car payments. Why? Because the value of a brand new car drops by as much as 20% after you buy it, thanks to depreciation.
If you need to buy a car, seriously consider buying a used one–they cost less and work just as well as a brand new one. Cars depreciate over time and you want to avoid your bank account depreciating alongside them.
Are you making any of these money mistakes? Tell us if these financial problems solutions helped you–or ask Bola a question–in the comments!
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