Four common financial mistakes to avoid in 2021

Four common financial mistakes to avoid in 2021

You will inevitably make some common financial mistakes during your life that you collect your money together. Sometimes these blunders are enormous; other times, they are just financial mistakes that everyone makes at some point in their lives. Either way, we are all human.

"It's important to start with good financial habits," Zagarola says. Managing Partner, Financial Planning Firm EKS Associates "Avoiding financial mistakes in your twenties and learning about wise investing strategies can make a huge difference as you enter your thirties and forties.

Making mistakes is part of being human and often how we learn and improve ourselves and our lives. 

No safety net

One of the most significant financial troubles you may face is living from one paycheck to the next. This practice is widespread, but that does not mean that it will not set you up for failure.

By managing your money with little (or no) wiggle room, you eliminate any safety net you might be able to build. If emergency expenses arise, you may not be able to cover them without going into debt.

Not paying bills on time

Missing payments or ignoring bills won't make them go away. Debtors will not abandon you. Missed payments will not only cost you more money in additional fees but will also result in poor credit. If you miss secured debt payments like your mortgage or car payments, you put yourself at risk of losing the house or the car.

You will avoid paying extra fees and keep your balance in good standing by paying your bills on time each month. A good credit score means you will be viewed as a responsible borrower and likely to get lower interest rates when applying for future loans or credit cards.

Not managing debt and keeping a good credit score

People suffering from bad credit pay higher interest rates when buying a car or home, and those extra dollars can't be saved for retirement or emergencies. Zagarolo says young workers should establish a good credit history by promptly collecting and paying all or most of their expenses.

No insurance

Young workers on a budget sometimes try to save money by not having insurance or purchasing insurance products, including health, auto, renter, and homeowner insurance. 

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