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How You Could be Wasting Your Hard-Earned Money

While a aaa membership cost may be worth it if you can utilize low insurance rates plus any membership incentives they offer, but taking a look at your entire financial picture is a good idea to examine all of the money coming in, going out, and figuring out if your monthly purchases are worth it.  While it may still be decades away until retirement, the earlier you can save the better, so your account has longer to grow over time, but if you are getting by paycheck to paycheck with not much left to put towards retirement, then it may be important to make a few tweaks to your financial behaviors in order to maximize extra money to put towards building an emergency fund, paying off debt, and contributing to retirement.

Not Monitoring Your Credit

These days you just never know who could be looking over your shoulder when swiping your card at the gas pump, pay a restaurant tab, not to mention having a store that you often to go being compromised and have your information leak out.  While some of that may be out of your control, that doesn’t mean that your credit file should go ignored, in fact, you should pull your credit report at least once a year to ensure all accounts are accurate, and every month you can view your credit score on monthly statements to monitor there are no drastic dips.

Spending Freely

If you were asking what your monthly expenses are, from bills to food, gas, and spending money, would you be able to say, or do you just charge up every month and hope you can pay off every month?  If you take a look at last month’s debit or credit card statement you can see every purchase made, and going line by line you can review charges, and discuss with your significant other if it’s a shared account, to try and curb spending for those purchases that probably could be deemed unnecessary, even if it means calling each other out if one person has been going on a spending spree as of late.

Following the Norm

The fact that most households do not follow a budget does not mean you need to follow the norm in this case.  Sure, sticking to a budget is tough, it means that you can’t spend whatever you please, as you set up allocated funds across your entire financial portfolio, but it may be what you need in order to curb spending and free up extra money each month.  Try using cash instead of credit for spending money, as at least that way once you run out that’s it.

Living Beyond Your Means

Each person’s financial situation is different, so there’s no reason to try and compared to family and friends, especially if you’re trying to keep up.  You never know what goes on within their four walls, as they could be irresponsible with money and are living beyond their means, so if you have everything in line with yours, you are in good shape.  Beyond that though, whether it comes to your home, cars, and what you spend, you should never try to live beyond you means.  If for some reason you lost your job or had unexpected charges come in, you want to have a cushion.  To keep some cash on hand just in case, it’s a good idea to build up an emergency fund of a few months’ worth of expenses so you can be prepared just in case.

Paying Credit Card Interest

Credit card companies are in business for a reason; they let you spend whatever amount of money you want throughout the month and if the statement balance is not paid by the due date, they can start adding interest, which depending on the card, could be 16%, and as the balance rises that’s a significant monthly payment to be making each month, especially if you’re only paying the interest, there will be little of the balance being chipped away and most will go towards interest, making it extremely important to use credit cards responsibly.

Leaving Free Money on the Table

If you are able to use a credit card responsibly and charge what you can afford, then using a credit card can actually make a lot of sense, especially when it comes to the rewards.  By making the purchases you were going to make anyways, you can earn points or cashback, which if gone ignored, could add up to hundreds of dollars a year you could be missing out on.

Comments

  1. It’s simple: just keep a regular log of all your outgoing expenses and incoming income. That way it’s clear if you’re spending too much money or not.

  2. So agree with these points, dear. I find that living above one’s means is the biggest hamper when it comes to financial independence. You might be able to afford a luxury car, but do you need it when you just want to get from A to B. I tell this to my teenage kids so that they understand that financial independence is all about living below one’s means and being selective in your expenditure.

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