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- Paying bills late: Late penalties can make up about 10-15% of your monthly bill. If you are frequently paying your bills late, that means you could be paying about 10% more on bills per year than you should be. If you are almost always paying some bills late, such as credit card bills, not only are you paying penalties but your credit score is probably also being dinged. If you have enough money to cover your bills but are just forgetful, set up reminders on your phone or start using a calendar to organize your bill paying schedule. If you struggle with budgeting, try using the old fashioned envelope method. Create an envelope for every bill as well as a spending money envelope. On pay day, put enough money in each bill envelope to cover that expense; any left over funds can be used for spending money. If some bills are still difficult to pay on time, try contacting the company to request a new due date.
- Experiencing bank fees: Every time you pay your bank a fee for having insufficient funds you are giving money to the bank that could have been used on you or your family. If you end up paying 3 bank fees a month at $36 each, that’s $1,200 a year! If you are always being hit with bank fees it is probably due to a variety of factors such as spending more than you make or not communicating with your spouse if you have a joint account. Try sitting down with your bank manager and asking for help with the situation. They may be able to take away some of the fees and can help come up with a solution to the problem such as setting up a savings account that would act as overdraft protection for your checking account.
- Taking out too many loans: If you are mainly using your credit card for everyday purchases and not paying off the balance every month or taking out payday loans, you are accumulating a lot of interest which can be very dangerous. Too many loans with a lot of interest involved can really create a financial hole. One way to build an emergency fund is to set aside money from every pay check to act as a rainy day savings account. For example, if you only set aside $10 every week, you will have $520 at the end of the year. Having an emergency fund allows you to “borrow” from yourself during emergencies instead of from a lender.
- Overspending: Spending too much money leads to many financial issues and can be a cycle that is very hard to break. Consider keeping track of your expenses online or with a phone app. Mint.com is a great resource but there are many other great ones including LearnVest.com and DailyCost.com, etc. Another tactic to use is to wait when making online purchases. Instead of purchasing something right away, try leaving the item in your online cart for a few days and then come back to it and see if you still “need” it.
- Spending money as soon as you get it: If you spend your paycheck as soon as you receive it without really thinking things through or putting money into savings, you won’t have money on hand when you really need it and the bad financial cycle will continue.