Avoid These Major Money Mistakes in 2023
We’ve all made a few mistakes with our money. After all, it is so easy to do. A small money mistake is usually easy to recover from, especially if you know what you did and what you should have done instead. However, there are some bigger mistakes that can be harder to recover from. Typically these mistakes start out small too. Yet if they are not corrected, they can have a negative effect on your financial stability today and in the future. These are five money mistakes that you want to make sure you avoid in 2023.
1. Spending Beyond Your Means
The first rule of fiscal responsibility is to never spend more money than you have. As simple as this rule is to understand, it can be hard to follow. It’s easy to spend money on discretionary items and then end up without enough left to pay for the necessities, like rent or mortgage and utility payments. One of the best ways to avoid this mistake is to have a budget so that you know how much money is needed to meet your obligations. Avoiding the use of credit cards can also help you spend only what you have.
2. Putting Off Saving for Retirement
In your 20’s and 30’s, retirement can seem like a far-off dream. It may seem like you will be working forever, but in a way, if you fail to appreciate the need to save for retirement, you may be forced to work far longer than you would like to. The benefits of saving for retirement are much greater at the beginning of your working career since savings will grow over time. Thus, if you keep waiting to start saving for retirement, it will take even longer to amass a large enough amount to fund your retirement needs.
3. Not Having an Emergency Fund
Emergencies are rarely planned for or even anticipated. That’s why an emergency has the potential to cause such financial hardship. To be sure that you have money available to deal with an unexpected event, such as a job loss or a sudden illness, it is important to set aside money in an emergency fund. This money can then be used to pay unexpected expenses and help you avoid going into debt during a crisis.
4. Letting Debts Grow
Money has a way of growing – either positively in investments or negatively in debt. If you have any debt, it is always increasing. Even when you are making payments on it, there will still be interest accruing on the loan. This is the reason that it is so important to eliminate debt as quickly as possible. If you have a credit card and you are only making the minimum payment each month, the balance on that card can easily balloon out of control.
5. Not Having a Plan
Perhaps the biggest mistake of all is not having any plan for your financial future. Without a plan, there are usually no goals, limits, or budgets. Without a plan, you will simply react to the situations you encounter financially. Typically this will result in more spending, less saving, and a lot of generally unwise decisions. The first thing you can do to get on track financially and ensure that your financial future will be a bright one is to think about where you’d like to go with your finances and how you can best get there.
Wherever you find yourself on the financial journey, Federated Bank is here to help. We offer all the accounts and services you need as well as helpful staff to assist you and answer your questions. In addition, our convenient tools, such as mobile banking, Card Valet, and online or mobile Bill Pay, make your banking tasks easier, safer, and more efficient. Whatever you need, we are here for you!
