While not every money situation is the same when it comes to income or expenses, but there are a few traits that can be followed to ensure you are set up for success now and going forward. You may always hear “it’s never too late” to get started, but the truth is, the more and more you put off improving your financial situation, it can be too late, and pretty soon you’re stuck in a mound of debt with no getting out and there is nothing saved for the future when you finally are ready to retire.
No Financial Cushion
You never know what will pop up in life and just when you think you are finally starting to get ahead with your finances, you get hit with a huge bill to replace an appliance, causing your budget to not only go out of whack, but the need to put on a credit card in order to afford, taking months or even years to finally rid yourself of the balance. By saving up a few months’ worth of expenses, you can give yourself a little financial cushion if the unexpected were to happen.
Too Much Unnecessary Expenses
Of course, it’s a good idea to go out to a nice restaurant on special occasions, but eating every meal out for breakfast, lunch, dinner, and even stopping for coffee? Probably not needed when you can go grocery shopping for a fraction of the price. Too many unnecessary expenses add up quickly and pretty soon you are running short at the end of the month to really put your money to good use. Start out small and make a few cuts here and there before you really sacrifice and cut the cable cord, which seems like the rest of the TV watching population are doing.
Making Only the Minimum Credit Card Payments
While there is nothing wrong with using a credit card, as it provides protection against fraud to not have to use your debit card and risk getting your account cleaned out, but when you start to charge up a balance you cannot afford and get hit with monthly interest payments, it can really send you down a financial decline, especially when you only make the minimum payment each month. In order to really rid yourself of the financial burden of credit card debt, pay as much as you can afford, and hopefully by continuing to free up extra money, you can throw more at the balance.
Missing Out on Free Money
There is nothing worse that blowing money on something you don’t need, which is like throwing money out the window, but how about leaving potential free money on the table? If you can use credit cards responsibly, some offer great free points and cashback by using the card, even if you’re only charging the items you would be charging anyways. Also, check at work to make sure you’re maximize any retirement account matching that your company will offer, otherwise you could be missing out on thousands a year which could add up to tens of thousands throughout the course of being employed.