There are certain financial habits which, when adopted and followed, can make you stay rich. We’re going to talk about some of them here to help you avoid throwing money out the window. Here are the 20 ways to help you avoid making stupid financial mistakes.
The advice “Spend according to your means” may sound evident but how reckless don’t you spend as a young man, thinking everything will be alright (you’ll be richer) when you grow old. The truth is the older you grow the more expenses you have and therefore the more financial problems pile up. According to Halifax, people with the most financial problems are those in their 40s and 50s. One in five of these people have such an overstretched budget that spending a dime more than necessary would bring financial hell. The best policy therefore is: don’t squander when you are young and your older days would be stress free.
“A penny saved is a penny earned,” yet how many people ignore this advice but rather lavish their money on needless gadgets and clothes and nights which do them in in the morning. The advice is to set up a savings direct debit, this way the money leaving your account isn’t evident. You can safely “blow” the rest on your heart’s desire.
If you owe £5,000 on a credit card at an APR of 18.9%, and you only make the minimum repayment every month (either 2% or £5), it will take you 50 long years and nine months to clear that debt, and pay £12,182 in total interest. Do the opposite and save yourself this headache.
Honouring the repayment of a mortgage, credit card, loan, mobile phone or hire purchase can increase your credit rating and make it easy to get cheap finance tomorrow. To ensure you don’t inadvertently miss any repayment, set up a direct debit.
Not trading in day shares, ignoring letters from Nigerian 419 princes, refusing to send cash for a jackpot in a Spanish lottery you’ve not even dreamt about, are some of the ways to avoid falling victim to scams and not make your money somebody else’s.
Drive slower and save up on petrol. For example, doing 60 mph saves you 30% fuel than at 70 mph. Driving within speed limits and not using a hand-held device will not bring fines.
Do you chain-smoke, drink heavily, gamble, chase after women, spend compulsively on expensive stuffs you could do without, etc? If you avoid these forms of addiction, you will not end up burning money and your finances could stay healthy.
This idea may be a shocker but the logic is this: raising a child costs about £13,000 a year. If you have to do this up to the age of 18, insurer LV estimates that your child will cost you £222,500 on average. These days that children hardly leave their parents’ roofs up to adulthood, the bill can be steep. In conclusion, raising a child is a financial freedom killer and the more children you have the more you hold financial freedom at bay.
The Joneses are richer than you and if you want to have solid finances, it goes without saying that you don’t keep up with them. They can afford to burn a little more money but not you.
If you have a pension and you die young, there would be no regrets. But imagine not having one and attaining that fateful age! It is therefore wise not to think of working forever, reducing your lifestyle one day, inheriting a wealthy relative, living fast, dying young, or winning the Lotto. Need peace in pension? Check this
Don’t turn compulsive buying into a lifestyle. The secret is to budget your expenditures and stick religiously to it.
Companies want loyal customers but that’s not to your advantage. When you stick to a bank, you get worse savings, mortgage, and credit card rates; to an insurer, you pay more for insurance; to a utility company, you pay more for energy, water and telephone; and to a store you pay higher prices. Not giving your custom to the same company brings competition among them and that is always good for the consumer as it leads to better services and lower rates.
Are your belongings gathering dust or cluttering your garage or basement? Then you’re ignoring money. Cashinyourgadgets will purchase your old mobiles, laptops, tablets and digital cameras. MusicMagpie.co.uk will help you exchange your clothes, CDs, DVDs, games, gadgets and electronics into money, and garage or car boot sales (You can do it here), or eBay or Amazon will do the same.
Be careful of sales people, especially those who work for a bank. This way you avoid mis-sold pensions, endowments, payment protection insurance, etc. Your life savings are on the line. Hold your unbridled trust at bay.
New houses hardly need any care and repair for years so your savings are safe. If you think all you can afford are old property ask anyone who bought one and they will tell you how they constantly need care and repair and always make you dip into your pockets.
Counting on yourself is safer than doing so on someone else. A woman may rely on her partner for a pension, and end up divorced and broke; and a child banking on a £78,000 inheritance from their parents, should know that according to Skipton Building Society only six out of 10 get something.
Maybe you feel obliged to buy an annuity—the income for life you buy with your pension at retirement—from your pension company. What you ignore is that shopping around can boost your retirement income by between 10% and 40%. Don’t do that and you end up with to 40% less income, your whole life.
If you’re in debt, get free advice today from debt charities such as National Debtline, StepChange Debt Charity, the Debt Advice Foundation or your local Citizen’s Advice and stay out of debt.
If you put these 20 recipes into practise, staying solvent wouldn’t be too tough.
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