Personal Finance Basics

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Personal Finance Basics: 5 Biggest Money Mistakes

Do you know the ultimate list of personal finance basics that will help you to make more money?

 

Avoid Common Mistakes

Mistakes are made with money every day by everyone when it comes to personal finances basics.

Some of the most wealthy people in the world make mistakes, people in the upper class make mistakes, and the poorest people in the world make money mistakes.

However, it is an unavoidable issue. The richer you are, the more those mistakes can be recovered quickly.

What are the biggest money mistakes people make?

Read on to learn more so you can make the best decisions going forward.

 

1. Neglecting Your Credit Scores

These credit report numbers are more important today than ever.

Especially today with a myriad of people defaulting on their debts.

Banks that lend cash are incredibly careful about to whom they will lend money.

Banks are searching for low-risk customers.

If your credit rating is at 750 or higher, lenders will do almost anything for you at your will.

A high credit rating also means you will get great rates on home mortgages, car loans, personal loans, and credit cards.

In addition, insurance company’s and landlords use credit scores to determine potential applicants, that’s why it is imperative to maintain your credit.

Do you know your credit score? There are all kinds of resources that can show you. They will help with your personal finances basics.

 

2. Carrying Credit Card Debt

If you carry a balance on your credit card not only are you paying exorbitant interest rates but you also ruining your chance to receive a mortgage or some other kind of loan and you are lowering your credit rating.

This is one of the fundamentals when it comes to personal finance basics.

If you would like to fix your finances, you need to eliminate your credit card debt.

If you need assistance in eliminating your credit card debt get it.

Note: Yes, keeping a credit card will actually build your credit rating over time so it is not a ‘bad’ thing.

However, you won’t have any leverage with creditors if your credit is in bad shape.

As a result, the sooner you eliminate your credit cards, the less likely you will mess up your rating.

 

3. Too Much Home or Auto Debt

Credit experts advise that you ought not to exceed thirty percent of your gross income when it comes to how much you are paying for your mortgage.

On that same line of thinking, how much you pay in transportation expenses shouldn’t be greater than ten percent of your earnings (that includes insurance, gas, and repairs).

If you are paying more in one or both of these categories, you are in over your head with regards to home or auto debt.

What to do? It could be time to rethink business opportunities and increase your income.

If you are unable to afford a home or apartment with a thirty year fixed rate mortgage, you can increase your income first.

Those are easy personal finance principles you must know.

 

4. You Tapped Into Your Emergency Fund

The value to get money in hand has become more and more precious with each passing day. You should have an ’emergency fund’.

I am writing that term because most people can relate to it and easily understand this.

However, I prefer to call it a ‘life’ fund.

Because in life things just come up sometimes.

Pro Tip: Don’t wait for an emergency to start saving up. Do it now and it is more rewarding to see the dollar bills stacking up.

It is good to have an additional amount of money you are saving up for a great investment.

That fund can also assist with paying for unexpected expenses like as automobile repairs, and it will even cover any bills.

 

5. Calculating How Much To Save

Most people aim to make an amount that’s equivalent to three months living expenses.

In case you have a family it is sensible to be able to pay six months.

Certainly, the more you can afford, the better.

If you don’t have your own life fund, you should start creating one.

A way to start is to have a goal of creating a sum of $1,000 and then go from there.

 

Conclusion

You deserve to feel confident about your money decisions, but everyone does.

The fewer mistakes you make, the better off you will be.

If you can prevent these five crucial errors, you can start enjoying the financial freedom you deserve.

In conclusion, trying to live within your means, staying on top of your debts and your credit are the personal finance basics we can all benefit from for long-term wealth.

 

Faithful in your success! 

 

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