By the time your paycheck is deposit, you pay all necessary bills, there probably isn’t much leftover at that point, so it’s important to make good financial decisions with what is left. Sure, it can be easy to go on a shopping spree, have a night dinner out, or blow a $100 at the bar. While there is a time and place for all of that, if you can use spending money in moderation while you ensure that you are set up for success not only now, but for the future, you will be in good shape. It can be easy to fall into debt and go broke before you know it, so try and avoid those behaviors.
Not Having an Emergency Fund
You never know what life will throw at you, and what it will cost, so it’s best to be as prepared as you can so you can avoid having to put an unexpected vet bill, auto repair bill, or needing to replace your furnace in the winter, which could put you behind for months if not years. If you can put a few months’ worth of total expenses into a savings account to have on hand if there are any emergencies, you can provide yourself a nice cushion if any unexpected charges do come up.
Charging Up for the Rewards
Credit cards can make good financial sense when they provide protection against fraud, coverage for a rental car, and more importantly, why I use a credit card for every purchase I make, the rewards. You can earn miles, points, or even dollars on the purchases that you were going to make anyways, so it’s leaving free money on the table if you don’t use one. The problem though is once you see the rewards start to pile up you may be temped to overdo the charges just to earn rewards, but if you fall into debt and cannot pay the balance by the due date, what you pay in interest will outweigh the rewards.
Putting Off Saving for Your Future
Although it may seem like forever from now until you retire, which that may be the case if you are decades away, but that doesn’t mean you should put off saving for your future until later. Some might not even know what does IRA stand for, you’re not alone, but a good place to start would be a 401k account at work, at which you can check to see if they offer any matching, otherwise that would also be leaving free money on the table if you don’t take advantage. From there, an IRA or brokerage account could be helpful tools to earn money over time.
Ruining Your Credit
You may not attribute credit to going broke, but if you figure that your credit score dictates what your monthly payments are going to be when it comes to a mortgage, loan, or APR on a credit card, then you’ll want to strive for the best credit you can, as any increase in interest rate just means that much more you will be spending in a month. By making regular on-time payments, keeping debt low, and not applying for many accounts, you should see your score continue to rise each month.
Avoid Paying Attention to Purchases
The problem with a credit card over cash or debit, is that you really don’t run out of money, that is until you hit your credit limit, so it can be a real shock when you receive the bill in the mail, then figuring out how you are going to pay that balance back before you get hit interest. If you can track spending, specifically unnecessary purchases, you can stay within your spending budget. It’s a good idea to take a look at last month’s credit/debit card statement and actually go line by line for every charge, seeing what was necessary and what probably could have been avoided.
Living Beyond Your Means
When it comes down to it, unless you are able to generate extra income somehow, or reduce expenses, you are stuck with the money that is coming in being more than going out, so you have to live within your means, no matter how hard that can be if you’re trying to keep up. Whether that is your house, car, clothes, restaurants, you will need to figure out what you can afford, and continue to afford, as it doesn’t matter what anyone else is spending. If you have free money after paying bills and taking care of your future, then by all means spend a little on yourself.