7 Money Mistakes To Avoid

No matter how much money a person makes, debt may be a reality and it can lead to a financial crisis. People could read an extensive list of "do nots" regarding spending, but there are 7 money mistakes to avoid that everyone should know. These seven easy principles will keep anyone from the devastation of filing for bankruptcy.

Mental accounting is a major problem. No one should spend money without tracking. Whether cash, credit or debit, all purchases and payments must be tracked. This discipline helps people to know what is going out versus what is coming in.

Living without a defined budget primes crisis situations. People must carefully define their income and balance that with their bills. Luxury purchases should only be made when income allows the excess.

Purchasing on credit may be gratifying in the moment, but it breaks the bank in the long run. Interest payments (the fourth money mistake) reduce the value of any purchase. Credit should be reserved only for the most major emergencies. Otherwise, you may end up looking for bad consolidation debt remortgage programs and other debt consolidation options. You can get bad debt consolidation loans if necessary but they should be an option you consider carefully.

Not saving is the fifth money trauma. People who live paycheck to paycheck assume that they will never have wealth and so do not behave like it is possible. Anyone who saves can eventually attain personal wealth.

The sixth common mistake to avoid is spending for ego. People want to look successful and they will do almost anything to appear so. It may come in an innocent package like buying a dish for dinner that is above the person's budget so they do not look miserly. This quickly leads to debt.

The final mistake to avoid is blind investment. Blind investing is putting savings into a low yield savings account or a stock that is familiar to the buyer but not intimately known. Both may paralyze the opportunity to yield interest in the person's favor.

With these 7 money mistakes to avoid, anyone can begin the journey to financial independence and responsible cash handling. Money is tight in the economy right now. True discipline makes these days a benefit. Careless financial tracking leads to bounced checks and bankruptcy.