We don’t always know what’s going to happen, so we can’t always plan our finances effectively. Unexpected costs, reduced income and increased expenses can make it difficult to budget and save, so it’s important to manage our money carefully. Here are 5 money decisions you could regret later.
1. Using credit for non-urgent or non-essential purchases
It can be tempting to splash out on holidays, new cars, the latest technology and luxury items, especially if you are offered credit. However, taking out credit cards or loans for non-essential items or non-urgent purchases can cause problems later down the line.
The interest on a loan or credit agreement can make the total cost much higher than if you saved the money first and paid for something outright. If an emergency cost comes up, you may not be able to afford it because you are still paying off the unnecessary purchase.
If you want something that is not essential or urgent, try saving up the money for it instead.
2. Not saving for a rainy day
Saving money might seem like a boring option, but having money set aside for a rainy day is very beneficial. You can use it to replace an essential item that breaks down unexpectedly, put it towards something nice for the whole family, or have a bit of financial security if your income is suddenly reduced.
If you aren’t saving a little bit of money every payday, you might regret it later down the line.
3. Overspending on store cards or catalogues
It can be tempting to have a splurge on clothes if you can buy whatever you want and worry about paying for it later. However, this can be a big mistake. It’s easy to lose track of what you’ve spent if you are putting it on store cards or catalogue accounts, and you’re more likely to buy items that you end up not wearing. When the time to make repayments arrives, you could find yourself struggling to pay.
When it comes to clothes, it’s better to save up for a shopping spree or just buy items when you really need them.
4. Borrowing more than you can afford to pay
Before you take out any loans or credit, you should work out how much you can afford to repay. Calculate what you need each week or month for rent, bills, food and essentials. Decide how much you will need for savings or as a buffer for emergency costs. Once you have worked this out, the amount left over from your income is what you could afford to repay on a loan or credit card. It might not be as much as you originally thought.
Taking out large loans or high-interest credit cards without working out if you can afford the repayments, could result in lots of additional interest and late payment charges. These can then lead to increased debt and financial difficulty.
5. Missing credit cards or loan repayments
If money is a little tight one month or you want to treat your family, you might decide to skip a loan or credit card payment. This is not a good idea as you may be charged a late payment fee. These can quickly add up, increasing your debt and resulting in extra interest being added to the remaining balance. If you miss too many payments, it might impact your credit rating and could also lead to further action being taken.
Planning wisely, setting a budget, spending sensibly and saving as much as possible will help you make your money stretch further and give you greater peace of mind. However, it’s not always possible to stick to your plan or save as much as you’d like.
At Morses Club, we understand that managing your money can be tricky sometimes. We specialise in providing cash loans to cover any financial emergencies that crop up; you can find out more about what we do in our about us section.
