Stop making these 15 money mistakes
Discussing money with our loved ones is awkward at best – and intimidating and nerve-wracking at worst. While budgeting is by no means a sexy topic of conversation, it’s a necessary endeavour to achieving your goals and creating the life you want.
Unfortunately, there are plenty of financial decisions that cost us dearly – just think about what you could do with an extra $2,500 to $5,000 in your pocket. It’s not typically one big ticket item that breaks a budget, but rather, “death by a thousand cuts” as the saying goes. The bright side is that your simple mistakes often have simple solutions.
Using credit instead of cash
Having room on a credit card isn’t always a good thing: research shows that people spend up to 18 per cent more when using credit cards instead of cash. If you have the ability to buy “that extra something,” your impulse spending risk goes up; if you have a points or cash-back credit card, you’re even more likely to spend to get the extra points.
The solution: Leave your card credit card at home and withdraw cash for shopping – especially for groceries. Here are 5 ways you can save money using credit cards.
Making only minimum payments on your credit card
Making minimum-only payments is a financial No Man’s Land. Case in point, if you have a credit card with a balance of $5,000 and an interest rate of 19.9%, you’re required to pay two per cent as a minimum payment on a declining balance – think $100 on the first month, $99 on the second month, and so on. At that rate, it will take you about 65 years – and more than $22,000 in interest! – to pay off your credit card. If you take that same scenario and upgrade to a fixed payment of $125 per month, you’ll be debt-free in just over five years (assuming you’re not reusing the card). Of course, you’ll still pay $3,274 in interest, but your future-self will thank you for the saved time and money.
The solution: Do your best to put your credit products away. If you absolutely must use credit, be sure to make higher than minimum payments. Here are 6 more surprising ways you are wasting your money.