5 major money mistakes you should avoid in 2020
Sometime during our lifetime we spend more than we planned, saved less than we should have or just made some horrible financial decisions. A few financial misfortunes here and there can add up to a lot of lost cash in the year 2020. Check out these common money mistakes and follow the advice in yeard 2020 to help put you on the path to a brighter financial future.
Money Mistake #1: No idea where your money is going.
What's The fix? Making a budget is the best thing you can do to find out all the ways you are throwing away your money. At the end of the month you see you have spent $250 on fast food and $0 on paying down your high interest credit card then you need to make some spending adjustments.
Money Mistake #2: Not having an emergency fund.
What's The Fix? Try and save a chunk of money in case something unexpected happens. It's a good rule of thumb to have 3-6 months of expenses saved in case of an emergency. Set a goal and don't stop saving until you hit your goal. If you're not sure how much to save look at your monthly budget and figure out where you can cut to start saving for a rainy day.
Money Mistake #3: Waiting to save
What's The Fix? Start saving NOW. Opening a retirement account in your 20s can potentially give you twice as much money as someone who starts one in there 30s.
My recommendation is to follow the Ten Cent Law. Take ten cents of every dollar you earn and put it in your savings account. It won't be hard to Live on 90% of your income, and you'll soon have a very nice nest egg.
Money Mistake #4: Using High-Interest Debt
What's The Fix? If you are regularly overdrawing your checking account, using credit card advances or payday loans, you are essentially throwing your money away. Borrowing is OK, but those forms of debt are way to expensive. These forms of debt most always come when you have exhausted all other options.
Money Mistake #5: Paying off debts in the wrong order
Bigger balances on things like student loans and mortgages can seem overwhelming, but it's the smaller credit card bills that can really hurt you.
What's The Fix? Pay off the card whose balance is closest to its limit (having balances close to your limit lowers your credit score), and then start chipping away on the card with the highest interest rate. Also, refinance big-ticket balances (mortgage, etc.) to make payments a little more manageable.
BONUS
Money Mistake #6: Spending money on items you could get for absolutely FREE
What's The Fix? Did you know you can get music, books, magazines educational classes, book clubs, and even printing services at the local library? Just access their website and see what they have available. Also, get involved in a clothing swap, borrow from a friend instead of buying, and maybe talk a walk in the park or hike a national park instead of going to the mall. There are plenty of free options. You just need to find them.
Money Mistake #7: Buying NOW
If you MUST have things BEFORE you have money to cover them, you've fallen prey to the great American debt trap. Just look at interest charges - debt isn't cheap.
What's The Fix? Are you buying things before you have the money to pay for them? Remember, debt isn't cheap. I believe in good things come to those who wait. I'm sure you've heard this before. If you can wait until later to buy that all important item and put money away to save for it, you won't have to use high interest credit cards. That's how you become debt free.
