It can be easy to make mistakes with money. It’s easy to make mistakes with anything. However, with money, certain pitfalls are easier to avoid than others. Here are some common money mistakes that can be avoided with just a bit of work.
Buying Too Much House
Just because you got approved for a huge mortgage doesn’t mean you need to use it all. Think carefully before buying a house that might end up breaking the bank. Here are some guidelines:
- Aim for monthly housing costs (mortgage, property taxes, insurance, HOA) not exceeding 28% of your gross monthly income.
- Avoid PMI (private mortgage insurance) by putting 20% down.
- Emergency savings: 3-6 months of expenses saved.
You don’t want to funnel all of your cash into your home just to keep the lights on.
Not Investing
You simply have to invest to ensure you have some retirement nest egg. Even the highest-yield savings accounts can’t match the returns of the market over time.
- Start small.
- Setting aside a small amount is a great way to start.
- Use direct deposits into your work 401(k) or IRA.
- Put your money to work with investments.
Even a little bit into investments over time will compound and grow. You’ll be happy you did when the time comes to step away from work.
Paying for Things You Don’t Use
Everyone has subscriptions that they never or rarely use. Those little fees add up over time. Here’s a game plan to follow:
- Go through your accounts to find all your subscriptions.
- Cut the ones you don’t need.
- Reallocate that money to pay down debt, build emergency savings, or invest.
Not Tracking Money
You have to use a budget. It’s not fun, but it’s necessary. If you don’t track your spending, earnings, and savings, you will most likely eventually run into problems.
Forgetting to Check Your Credit Report
You can check your credit report weekly (one from each credit bureau) for free.
- Check your credit report regularly.
- If there are inaccuracies in your report, dispute the errors.
- Get them fixed, and watch your credit score jump.
- If you are a PFCU member, check your credit score and report through PFCU Online Banking today.
If you are currently experiencing these money mistakes or would like assistance assessing your financial habits, planning financial goals or building a budget, contact a PFCU Financial Coach. To set up an appointment today, please call 844-517-3611 or email pfcuinfo@pfcu4me.com.
Information Provided By: SavvyMoney