Most of the financial planners only suggest dealing with the investment portfolios of clients who have a high net worth. But, the actual financial expertise is proved when one is able to regularly help people who have to face general financial issues. There are some unnoticeable mistakes among people of all income levels which can hurt their abilities for managing their daily finances and saving their long term goals. If you really understand the importance of money and concern the money management at top priority, then don’t miss to read this article.
Here are four common mistakes you need to avoid if you want to carry on better financial management in your life:
# Getting a big tax refund every year
This means you might have an excess tax withheld from your income. If you are only able to save through this method, then nothing better option than it can be. Suppoisng you are putting that money either in your savings, or use the same to pay your debts. The major problem with it is that it is not the most efficient way to save. You will not only lose the ability to earn something on an interest-free loan, but you can also lose access to money in case of an emergency.
If you want to get a tax refund in a large amount, you can take help from any IRS calculator from the W-4 form. Finally, you need to be sure that you have sufficient money to tackle the situation of emergency.
#Making only a rough idea in your head about where your money goes
Management isn’t possible of anything until and unless you do not measure it. The same rule applies to money management. If you are not calculating the exact figure of money spent by you, you will always lack money management. Most of the people just show a few bills and expenses with the major priority. But, the situation becomes irritating when they have to go through their bank loans and credit card bills. If you are in a debt trap, you will always be amazed to see where your money is really going.
One method that can work is you need to go through a minimum of 3 months of previous records and statements based on a category on an excel sheet.
The second method is to use any expense tracking software to track your expenses in a refined manner.
# Taking all monthly expenses light
The largest sources from where the credit card debts are figured out are holidays. To convert them into monthly expenses, just divide the spent amount every year by 12. This way you will automatically decide the number of monthly expenses whenever you need it.
#Splurging more than your ability
If you are clear about all your monthly expenses, you can work on making plans to reduce these expenses. Just don’t regret earning less, so many people are living in scarcity, therefore you can too.
Have your memberships and subscriptions that you don’t really use?
Did you ever try to track your spendings on policies, groceries, cell phones and electricity bills?
Have you ever tried to determine the purchases you are making are really needed or you did it to uplift your status symbol?
Can’t you imagine low-cost methods to spend your lunch breaks with homemade food, in spite of spending a few bucks daily on coffee, tea and fast food?
Just take the initiative. You will be surprised to realize how small changes really add up over a time period. I hope, you liked the description of money management.
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