Few people are born with the innate ability to manage their money perfectly. It’s a skill most of us learn through trial and error.
This method works most of the time, but it does mean you’ll make a few mistakes over your lifetime. To make sure you aren’t making any that could be costing a lot of money, check out this list.
Borrowing When You Don’t Have To
Sometimes, borrowing money is a necessity. You may not have enough cash on hand to make an unexpected repair to your air conditioner or car. If you can’t put off these repairs, an installment loan can be a financial stopgap when your savings fall short.
Some online installment loans direct lenders like MoneyKey make it easy to apply. If you head over to MoneyKey.com where you can see quickly if you qualify for an installment loan.
But what if you can put off these repairs? This is an important question to ask before you start visiting online installment loans direct lenders’ websites. Some things aren’t as urgent as you first suspect.
If you can safely delay repairing appliances or your car, you may avoid taking out installment loans by saving up.
Making the Minimum Payment
When it comes to a line of credit or credit card, you have an option to pay less than your full balance. On the surface, this seems like a big win, but this payment style results in big losses.
The thing is, it doesn’t change the fact you owe money. It only changes how quickly you pay it off.
Because you pay only a portion of your full bill, you end up carrying over a balance that’s subject to interest and finance charges.
So what does this mean?
You end up paying more because any delay allows interest to accrue, which means you’ll owe more even if you don’t charge another penny to this account.
Only rely on the minimum payment in an emergency. Otherwise, always pay your full line of credit or credit card balance if you have the cash.
Living without a Budget
Without a budget, you may not have an accurate tally of your income or expenses. These details are need-to-know, especially if you live paycheck to paycheck.
If you’re finding it hard to pay bills or squirrel away cash in savings, take a budget for a test run. It gives structure to your spending habits, so you can prioritize cash toward your needs and goals.
As long as you follow it, you’ll be able to avoid impulsive shopping that eats into your paycheck and leaves you short.
Waiting for a Tax Refund
Come tax time, a refund is always better than the alternative — that is, owing the IRS money — but it’s still not ideal. A refund is only possible if you withhold too much tax during the year.
While you will get this money back eventually, you’ll have to wait until the IRS processes your taxes. It’s kind of like giving the IRS an interest-free loan.
By adjusting your W-4, you can reduce how much tax you pay during the year. This lets you keep extra money with each paycheck.
Bottom Line
Some mistakes do more harm than others, but don’t fixate on the consequences too much. Instead, focus on how you might set new, healthier financial habits. Try out what you’ve learned here today to start your new financially-savvy life.
