Common Financial Mistakes To Avoid

Common Financial Mistakes To Avoid

Mistakes are part of life, but there are some that can be (literally) costly. If you want to secure your finances and avoid stress, here are some common financial mistakes to avoid.

Not Sticking to a Budget

A budget is a plan based on your income and expenses. It allows you to see how much money is coming in and out so you can determine how much you can afford to spend. For most people, a budget is created every month.

If you don’t stick to your budget, you are likely to spend more than you earn. You might run out of money before you know it. This increases your risk of going into debt.

Bad Credit Card Habits

Carrying a balance month-to-month, missing payments, taking out cash advances, and always maxing out your credit, are just a few examples of poor credit card habits. All those interest, penalties, and charges will add up, pushing you deeper into debt.

Not Having an Emergency Fund

An emergency fund is money set aside for unforeseen events such as sudden illnesses, accidents, and job layoffs. If you don’t allot money for emergencies, you will be forced to rely on credit cards or borrow money from family and friends when you are faced with challenging situations.

Not Planning for Retirement

It still may be a long time before you hit retirement age, but that doesn’t mean you delay planning for it. If you don’t have a pension plan or ample retirement savings, you might struggle just to get by in your golden years — a predicament no one would want.

For those who are saving for retirement, some of them forget to factor inflation into their plans. The cost of living might have doubled by the time you retire, which is why financial advisors recommend assuming an annual 3% inflation rate when planning for retirement.

Not Being Insured

While getting insurance (medical, life, car, home, etc.) means extra expenses to include in your monthly budget, it will help you prepare for life’s uncertainties. Unexpected events such as major illnesses, accidents, and death, all entail enormous bills. If you are uninsured or underinsured, you will have to cover all the expenses on your own, which can be a terrible financial downturn.

Avoiding these financial mistakes can help keep you free from debt and let you live a comfortable life now and in the future. If you need to open a bank account for personal savings or retirement, visit any of Liberty National Bank’s branches in Oklahoma and Texas.