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The start of a new year is often a time for fresh goals and plans, but it’s also a chance to reflect on past financial missteps. Many people fall into the same traps year after year, which can set them back in achieving their financial dreams.
To help you stay money smart, let’s look at six common financial mistakes and how you can avoid them to stay on track!
Failing to track your expenses is one of the quickest ways to lose control of your finances. Without a clear understanding of where your money is going, it becomes very easy, very quickly, to overspend or neglect important financial priorities.
How to avoid it
Debt, when ignored, can snowball into a larger problem due to accumulating interest and fees. Instead of pushing it to the back burner, being mindful and aware of your outstanding debts can help you avoid financial stress and financial strain.
How to avoid it
While holidays and special events are meant to be enjoyed, it’s easy to go overboard with spending during these times. Managing your spending on holidays and events can save you the financial regrets later, keeping your expenses within your means and protecting you from accruing unnecessary debt.
How to avoid it
Life is unpredictable, and unexpected expenses like car repairs, medical bills, or job loss can occur at any time. Having an emergency fund can help you avoid turning to debt to cover your costs in these situations, and reduce any additional stress.
How to avoid it
Read more on Why you should think about saving money for an emergency fund for more practical strategies on building your emergency fund. Or consider Beforepay Pay Advance for emergency 24/7 loans.
Lifestyle inflation happens when your spending increases as your income rises. It’s natural to want to enjoy the money you’ve worked hard for, but being mindful of this so you can keep your spending under control can help you stay on track to achieving your long-term financial goals.
How to avoid it
Planning your finances for the future can help you prepare for major life events like retirement, buying a home, or funding your children’s education. You don’t have to have everything figured out now, but starting with small changes, and doing these consistently, can set you up for success later.
How to avoid it
Avoiding common financial mistakes requires awareness, planning, and consistency. By tracking your spending, tackling debt, budgeting for holidays, building an emergency fund, resisting lifestyle inflation, and planning for the future, you can set yourself up for a financially healthier year. Small steps can lead to big improvements—start today!
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