Saturday, March 05, 2016

Common Financial Mistakes & How To Avoid Them ♥

Being financially savvy isn’t always easy, especially if you’re a busy parent. If you’re not careful, you can end up making a series of mistakes when it comes to money management, that can cause you problems further down the line. I'm currently on a self-imposed spending ban due to spending too much on impulse buys and trying to save up for a new car, so I thought it was time to really think about my own financial mistakes and share ways on how to avoid putting yourself in the red. To help you avoid financial faux pas, here are some of the most common errors, along with advice on how to avoid them.

Not Saving Enough
According to a poll conducted by the specialist insurers Partnership, 40% of people believe they are not saving enough money. The fact is, by the time we’ve shelled out to cover household expenses and living costs, many of us struggle to find extra money to put away for the future, however, this can be storing up trouble. Without a reserve of funds, you might find it hard to cope with potential drops in your income and you may not be able to cover expenses like property or vehicle repairs.

One tip that can make saving easier is to set up a standing order into a savings or investment policy that leaves your account on or shortly after payday, rather than waiting until the end of the month when you may be short of money - I'm sure we've all seen the memes about having 'too much month left at the end of the money!'. This might mean you have to be more careful with your budgeting, but it will be worth it if it helps you create a financial cushion.

Make sure you find a suitable savings product too. You might decide that an individual savings account would suit your needs, or if you’re looking for a more specialist style of investment, something like RL360° Quantum may be better. This product lets you choose from a range of investment funds and it’s available with minimum monthly premiums of £200.

Failing to put money into a pension 
Another common financial mistake is not paying into a pension. It’s important to be aware that while the state pension can provide you with a financial foundation for your post-work years, the chances are it won’t be sufficient to enable you to enjoy the lifestyle you want. Pensions are long-term saving solutions that benefit from tax relief.

Thanks to auto enrollment, it’s now easier for many people to save into workplace pensions. Since October 2012, larger employers, within the UK, have been obliged to offer workplace pension arrangements, and to automatically enroll eligible employees on these schemes. This requirement is set to be extended to all employers by 2018. You may also benefit from putting money into a private pension. For guidance on your options, you can speak to a financial adviser.

Tracking your mileage correctly
Over the years it’s been very fiddly trying to track exactly what was a business drive verses what was a personal drive. Notepads, mental notes, writing on the palm of your hand, forgetting altogether and trying your hardest to think back to last week. These are all ok if you can actually remember each drive down to a T but usually this isn’t the case. Introducing my saviour, MileIQ Mileage Tracking App. Does exactly what it says on the tin and perfectly. No more forgetting when you went where and how long it took you to get there – the app has done it all for you. All you simply need to do is swipe left or right if it’s work or pleasure. Your accountant will love you forever.

Many of us are guilty of overspending from time to time (I know I am when it comes to Ebay purchases and not factoring in the extortionate postage costs!) and if this becomes a habit, it can lead to major debt. If your outgoings repeatedly exceed your income it’s time to rethink your approach to spending.

There will be a whole range of costs that you simply can’t avoid, but it may be possible to cut your discretionary spending considerably. For example, making lifestyle changes such as forgoing holidays or meals out might help you to bring your finances under control. Also, bear in mind that if you’re in the process of paying down debts, you should try to ensure you cover at least the minimum payments on each account so that you don’t fall behind. If you find you can afford to pay more, it’s important to prioritise the debts with the highest interest rates. This could save you substantial sums in the long term.

By avoiding common financial mistakes and managing your money carefully, you can give yourself greater peace of mind and help to secure your family’s future.

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