7. Living Paycheck to Paycheck
Most of us spend our entire paycheck and wait impatiently for the next. Living life to the fullest has become the motto for many people, and this leads to spending everything they earn without thinking about the future. Dinners, movies and drinks have become essential aspects of our lives, and we forget how easily our financial situation can take a turn. This puts one in a horrible position of being without any money if a paycheck were to be missed.
8. Not Having Enough Insurance
Insurance is a crucial emergency fund that supplements your cash emergency fund. It covers the things you could not save up to cover in advance, thus helping protect your largest assets in case of a major accident, injury or death. You should have enough insurance to replace your assets in case of extreme need. This may include auto insurance, home insurance, health insurance, long-term disability insurance, life insurance and long-term care insurance. However, it is also important that you don’t go overboard in buying insurance. Take a balanced view and only pay for what you truly need.
9. Having High Car Payments
Car loan payments cause many people to find their heads ‘under water’ financially. We all know that a car is an asset whose value starts to go down the day it is purchased. Most people spend thousands of dollars on a new car only to find out that its value is seriously depreciated after a couple of years, while they are left having to make payments on the car loan. A car is a big investment, so spend judiciously on it. Buy a pre-owned model to minimize your loan payment and save enough for tough times.
10. Not Getting Professional Financial Help
High interest rates, huge expenses, lower income, more liabilities – at times all these factors can leave us confused. Despite trying hard, we are unable to come out of the vicious circle of debt. If you honestly need help with something – such as taxes, real estate investment or debt management – don’t try to go it alone. It is wise to seek professional help if you really need it. This may make it much easier to analyze your situation and make the proper financial plans for the present and the future.