Mistakes — everyone makes them. But when it comes to the mistakes you make while managing your money, your missteps could be costing you cash.
Luckily, like any mistake in life, there’s a lesson to be learned when things go wrong. With a subtle change in how you handle your money, you can save a lot of cash.
Here are three of those mistakes, and their solutions, too.
1. Borrowing When You Don’t Have To
You might need to take out an installment loan online when an unexpected emergency blindsides your budget. If your on-hand cash falls short of making an essential repair to your car when it breaks down unexpectedly on the side of the road, you can feel secure in knowing there are online loans available to help.
The thing is, some loans online come with costly fees and short repayments periods. A direct lender payday loan is the perfect example.
If you take the time to research a payday loans direct lender, you’ll see that their loans are due back in one lump sum by your next payday. In some cases, that only gives you two weeks to repay what you owe.
Missing this due date may result in late fines, added interest, and even credit damage depending on your payday loan direct lender. These charges put you in an even worse position than when you borrowed, so it might not be worth the risk.
You should only borrow when you have to. If you can safely delay an auto repair, you may avoid paying these charges. If you can’t, research installment loans that provide more manageable terms.
2. Living without an Emergency Fund
One of the most common reasons why people use loans is because they don’t have savings. And while there are alternatives to direct lender payday loans, they still charge interest you could avoid by having an emergency fund.
To avoid these charges, aim to set aside some cash each month in short-term savings, working to build up to six months of your living expenses.
This is a big target, but it’s possible with the right budget. Check out this guide on percentage budgets to prioritize your spending so that you can put cash towards an emergency fund.
3. Making the Minimum Payment
The minimum payment on a line of credit or credit card may seem like a blessing in disguise. And in a tight month, it is. The minimum keeps your account in good standing without needing to pay off your entire bill.
However, any portion of your bill you carry over to the next month is subject to interest and finance charges. These charges accrue, even if you don’t charge another penny to your line of credit or credit card.
That’s why you should try to pay your entire balance any time you have the cash. It makes a more significant dent against the debt you carry, frees up your credit limit, and it may reduce what you pay in interest and finance charges.
Don’t dwell on the fact you made these mistakes. Take heart in the fact that you’ve learned something new. Set better financial habits to make up for the mistakes you’ve made, and you’ll keep more money in your pocket.