NDSU Extension Service - Ramsey County

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Money Management Mistakes

Money Management Mistakes

 

          This column has long stressed positive ways to manage money but sometimes we do need to address the “don’ts”.   How do people find themselves in a money muddle? Often by doing one or more of the following.

          Skipping the Spending Plan - The "where does the money go?" question frequently comes up because of spending on a day-to-day basis, without any sort of plan for taking care of needs and wants.  Know your regular expenses; determine what your goals are in relation to short-and long-range aims.

          Overuse of Credit - Using credit can be a real help or a trouble spot -depending upon how you use credit. The biggest problem usually is that families overextend themselves and become committed to larger payments than they can meet.  Know the cost of credit terms.  Keep track of expenditures made with charge accounts or credit cards, so the bills won't come as a big surprise to you. And pay on time to keep your credit rating solid.

          Spending Windfalls - You receive a tax refund, a bonus or raise, perhaps an inheritance. Most families are inclined to spend the extra money on luxuries they wouldn't ordinarily consider.  There are many ways to put "windfalls" to constructive use. Add pay raises to your savings before you get in the habit of spending the extra money. Use refunds or bonuses for needed large purchases, such as major appliances. You'll also save paying out interest charges.

          Allowing Leaks - Impulse buying--frittering away small amounts here and there on "little" things--can add up to a surprisingly big amount. Write down every cent you spend for a week and take a good hard look at your spending "leaks." Then try to control these trouble spots.  

          Living with a “can’t wait attitude”- This money management mistake hits young people the hardest.  The "great American dream," as portrayed by movies, television, and magazines, is beyond the financial reach of most families and is never reached by overusing credit.

           Not having an emergency fund - An emergency fund is your first line of defense against unexpected financial problems.  Washing machines break, cars need repairs, kids need braces, and so on.   If you don’t have an emergency fund, you will likely have to borrow money when an emergency pops up.

           Neglecting to make a will - Money magazine reports that 57% of Americans don’t have a will, including 69% of parents with kids under 18.

Without a will, the estate laws of the state you are residing in decides what happens with your finances and your children.  To avoid this bad money move, you need a will and the other documents that account for good estate planning such as medical records release documents.  

 

 

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