Most people are trying to be good stewards of their money, but there are some common money mistakes that can cost you. The following list should keep you out of trouble and give you an idea of what to avoid.

Living beyond your means. This generally causes you to use credit to pay for living expenses. When that happens, it is not long before you are in financial crisis. If you find yourself using credit cards to pay bills because you have no money to pay them, it is time to change your lifestyle - immediately. Placing money in a low yield savings account. A better option for liquid savings is a money market fund. The rates are higher than a standard savings account and you generally get checks as soon as you open the account. Placing all your investment money in one company, fund or with a single broker. Diversify your investments for the best returns and split your investment money between more than one company. Spending money on high depreciation items such as new cars, electronics, computers, etc. New vehicles lose thousands of dollars in value as soon as you drive them off the lot, therefore vehicles are a much better deal if they are bought used. Even a used vehicle should be driven for a long time before replacing it. Electronics such as televisions, stereo equipment and home entertainment systems are another group that lose value very quickly. For this reason, when you make such a purchase you should research your options thoroughly. Make sure you are buying from a reputable company and plan to keep the item as long as possible before replacing it. Computers not only lose their value, they become technically outdated very fast. In most cases it is better, in a financial sense, to buy the model that just got replaced with the latest and greatest, than to buy the newest model. Making purchases with credit cards. Unless you can pay the full balance of the card every month, do not buy on credit. Whatever the purchase is, it is not worth paying the interest. Also you will tend to spend more with a credit card than with cash. Psychologically spending cash makes you feel like you are spending more than when you use a card - it affects you more, so you tend to spend less. Spending on luxury items such as; vacations, recreational equipment, jewelry, new furniture, games or toys, before you have saved enough to cover 3 to 6 months of expenses. Many financial advisors recommend you save at least enough money to pay 3 months worth of living expenses. In other words, you should add up your monthly bills and save a minimum of three times that much before you consider spending money on extra items. Robbing from Peter to pay Paul. Taking money from a savings account or from one card to another is not a good way to cover expenses. If your having to make a credit card payment with another credit card, it is time to stop using credit and get your debt paid down before using credit cards again. Using the checks that come with your credit card statement. These checks may be tempting to use, but they come with high interest or a very short term low interest offer. Your best bet is to shred them. Use cash for purchases and if you don't have the cash, don't make the purchase until you do. Buying gifts for children or grandchildren and failing to set up a college savings account. Many children today have so many toys and clothes they don't need a single thing. In spite of that fact you may still be buying your children or grandchildren a myriad of new toys, games, electronic equipment and clothes. A much better option is to set up a college savings account. Even if the child grows up and doesn't attend college, they will have a fund to launch them into their young adult lives. You don't have to stop buying gifts altogether, but at least match them dollar for dollar with an account. Adding more expenses to an already tight budget. If you are just scraping by, now is not the time to increase your expenses. Even if you know you are about to get a raise or promotion at work, wait until you have deposited that first check to increase expenses.

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luydimopso luydimopso over 2 years ago

Bad financial management and bacteria have one thing in common - they flourish and mutate upon discovery. As soon as you realize you have committed bad money management, your error transforms itself into something else that looks too good to resist. financial mistakes you are making right now

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