Life is full of regrets, but some can be costly — especially financial regrets. That’s why it pays to spend your money wisely now. Avoid these ten money mistakes, so you don’t live to regret them a few years from now.
10. Living Beyond Your Means
It doesn’t make sense to spend more money than you make, yet people do it all the time — especially when they’re young. And, while it may seem like you have forever, you really don’t. Instead of blowing your money on things like clothing, clubbing, and dining out, save it to put toward your goals. Goals, such as buying a house. Still, you have to be careful not to buy more house than you can afford. “Committing too much of your monthly income to mortgage payments is risky — and it’s a bad idea,” Clark.com says. “You only want to spend up to one-third of your monthly income on housing costs, which include mortgage payments, insurance fees, and any homeowner’s association fees.”
Now, we’re not saying it’s never okay to splurge. Just make sure you’re smart about it. This can mean spending your money on a great experience (e.g. a vacation) rather than spending it on material things that won’t be all that important to you a few years from now. It could also mean living like a minimalist. While it may seem like you’d be depriving yourself, it’s just the opposite. Living like a minimalist means focusing on the things you love rather than wasting money on the things that have no long-term rewards.
9. Relying on Credit Cards
To many people, credit cards seem like free money. For this reason, it’s easy to get carried away and end up in debt up to your eyeballs. Yes, credit cards are a great way to pay for something when you don’t have access to cash, and they can be an excellent way for you to build your credit. But, many credit cards have high-interest rates, making it very easy to end up with a lot of debt in a very short time. To prevent this, make sure you don’t use them too often unless you have the money to pay off the balance. And, even that can be risky because you never know what financial emergency may come up that would require you to miss a payment or two.
And, speaking of payments, make sure you make more than the minimum each month. Not doing so will just keep you in debt even longer because paying just the minimum can lead to higher interest rates and possibly an inability to make your payments at all if those rates inch up too high.