Six Financial Pitfalls And How You Can Avoid Them

| March 4, 2016 | 0 Comments

The world of finance is always tricky for the novice. It can take a long time and a few headaches to truly nail down your finances. However, there are some pitfalls you can’t afford to fall into. For those, we have solutions that can help. These tips will help you sidestep some of the more common issues in finances. It’s not a fool-proof plan for financial security but it should help you spot some areas you can take care of better.

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Not knowing where your money needs to go

It’s a rather common problem. You don’t overspend, but you still find yourself forgetting about certain bills or loans. A few missed payments later and your financial situation has gotten all the worse simply due to bad memory. The fact is that most institutions don’t take human fallibility into account. For your own protection, make budgets for the month as well as the year.

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Losing track of spending

Now this one is something you can take more responsibility for. We have all felt the pull of temptation. Most certainly most of us have spent money we shouldn’t have. But it can be a real problem especially when the things you actually need money for comes around. Track your money in real time so you know where every penny goes. You might recognise and be less willing to indulge some of your spending habits once you see their effects.

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Tax mix-ups

Incorrect tax filing is all too common. No doubt this year will double the amount of errors. There are new tax dates, new refunds you can get and more forms to fill in. There’s also a rise in the tax rates. Prepare by adjusting your savings. Start by learning what exactly the new federal income tax rate is.

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Credit card debt

When used responsibly, credit cards are great. They can help provide a little extra cash and paying them off in a timely manner can improve your credit rating. However, beyond that, they are a trap that can take control of your finances for a long time. Avoid credit card debt whatever you do. Look at it as an emergency fund you should replenish as soon as you can, not as easily accessible extra cash.

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Future insecurity

There are no real ways to make your finances bulletproof. There are, however, ways to protect yourself. To keep your savings from disappearing due to upset in life, insurance is the key. When it comes to taking care of yourself and living comfortably past working age, you should take a look into different annuity options.

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Failing your financial goals

One of the most dangerous things to you personally is failing your financial goals. Psychology has a lot to do with how well we manage our finances. Failing ourselves can make us feel less able to save and become wealthy. The problem lies in the goals you’re setting. Learn how to set yourself SMART goals that are a lot more obtainable. Don’t be afraid to take slow steps to begin with. Any step towards financial stability is a good one.

Category: Personal Finance

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