Signs of Financial Illiteracy Part 1

Lack of money complain about people with very different income levels. If the salary is small, it is at least understandable why constantly there is no money. But what’s the problem in earning a decent amount? Why such people have a bunch of debt instead of property and savings?

For financial security are not sufficient to earn a lot, you must correctly manage your money, to be able to preserve and increase them. Below are ten of the most common mistakes that are made when handling your personal budget.

Spontaneous purchases

People often buy unnecessary things, continually guided by impulse. Subsequently, the purchase of years gathering dust on the shelf, leaving a hole in the budget and a dubious pleasure. The share of such spending can be a tangible percentage of the total monthly expenses. Not to succumb to temptation and buy any thing which was not in the plans. For a start it is desirable to assess its necessity on the farm, to check for existing similar items in the house, to compare the level values with planned purchases.

Wrong credits

The availability of credit brings personal finances more harm than good. It is difficult to resist the urge to purchase any product or service without having your own money and spending on credit is a minimum of time and effort. In most cases, the euphoria of new things takes place, and the debt burden is a poison for several years. Before applying for a loan should carefully consider its appropriateness. How serious a problem will decide the borrowed funds – the next new phone or the treatment of a child? If the loan is vital to reduce the negative consequences you need to choose its parameters. The loan must be in the same currency in which revenue comes. The amount is only needed without the “reserve”, and calculate that the monthly payment was no more than 30% of income.

The lack of financial planning

It often happens that even if you have savings and a decent income a person does not need to make a major purchase. This is due to the lack of financial planning and inability to prioritize. The important expenditure should be planned for many years to come. For example, a year or replacement vehicle for a new, three year repair, and five years after payment of a child’s education, etc. At every event the money is deposited separately and every month. In this case will not arise a situation when after buying the car did not have enough money to go on vacation.

Do not keep records of personal finances

The amount of money earned per month, as a rule, the value of is known, especially, if the income of one or two regular sources. But where and how much money is spent, track much less frequently. Without personal finance is easy to prevent unnecessary expenses to exceed the budget, more difficult to make savings. The freelancer who gets paid at different times various sums of money from several customers, it is useful to keep records of income and expenses. Monthly analysis will help to correct expenses, to pay attention to individual articles, to “put pressure” on the lagging sources of income and eventually save up for really important things.