Sometimes it can feel so hard to achieve financial goals. It certainly isn’t easy, especially in a high-inflation economy, where you might feel like your money runs out before the month ends. Yet sometimes we actually make it harder on ourselves with the choices we make. Here are some examples of bad choices that can make life hard.
Impulse Purchases
One common bad choice is making a purchase that you don’t have the funds for. If you don’t have the cash you need to buy what you think you need, you will have to borrow money to pay for it. This can be in the form of a loan or even just with a credit card that you don’t pay off right away. Anytime you borrow money, you will pay more than just the price of the item because interest accrues every month until the loan is paid off. When you use a credit card with a high interest rate and just make the minimum payment every month, you end up spending significantly more than the original price and may find it nearly impossible to get out of debt. The better way is to save money toward a purchase and avoid borrowing money. While that is hard in its own way because you have to wait, at the end of the day it will make your life easier.
Careless Spending
Similar to impulse purchases, another bad choice is to just carelessly spend without thinking much about the financial choices you are making. When you don’t keep an eye on how much money is available to spend, you can easily spend more than you should. Again, this may cause you to wind up with a credit card balance that is hard to pay down. Or even worse, it might make you unable to pay your other bills on time. This can cost you more money in terms of late fees and penalties and also can have a negative effect on your credit score. This will make life hard for you for a long time.
Nonexistent Emergency Fund
Another bad choice that people commonly make is to forget that emergencies are not scheduled and thus need to be planned for. By failing to save money back in an emergency fund, expenses that occur unexpectedly can really put a strain on your finances. Most experts recommend saving 3 to 6 months of expenses in an emergency fund. While that might not be possible for everyone, even saving a few thousand dollars can help you be prepared for the costly emergencies that might happen at any time.
Delayed Action
Finally, another choice that can make things harder down the road is to keep putting off financial action. It’s so easy to think that we can start next month or next year. That seems like a good thing at the time, but it will not get any easier to take specific actions regarding your finances. In fact, it often gets harder. For example, you might think that it’s hard to start a college fund for your kids when they are in diapers, but life is even more expensive when they’re driving cars. Start today, even if you have to start small and you will avoid the hard consequences of delaying action till tomorrow.
We all make financial choices every day, and we often don’t consider how those choices will affect us down the line. Life is hard enough – avoid making the choices that make it even harder. As you make financial decisions, remember that Federated Bank is here to help. Stop in to talk with us anytime.