What seems like common sense to some, can actually be very difficult for others. The following are some common pitfalls that should be avoided when possible:
Late Bill Payments
It doesn’t feel good to pay bills late, but in addition to that icky feeling, it can also have a negative effect on your credit score. Many financial institutions will report unpaid bills to the credit bureaus after 30 days, which is when it’ll make a dent. Being late and then forgetting to pay the balance in full can be a strong credit score set back.
Overdrawing your bank account
Gah! The simplest of mistakes is also one of the most insanely damaging. Overdrawing your bank account comes with a host of fees, an angry letter from the bank and usually a dip in your credit score.
Waiting to start investing
Entering the world of investing is daunting and intimidating for most people, but that’s not a foolproof excuse to avoid it forever. It’s easy to start tomorrow, but that means today we need to learn what we’re doing. Thanks to the JOBS Act, everyday people can now invest in exciting opportunities for nominal amounts of money.
Investing in things you may not understand
Warren Buffett calls it the ‘circle of competence’ which is essentially: ‘stay in your lane.’ For example, if someone worked retail, they would understand that space more than something they’ve never done before, like, petcare. Buffet advises leaning on the knowledge and context of your life and work experience in order to steer your investing sense of direction.
Not having an emergency fund
Saving money for a rainy day is not a glamorous way to spend extra money from Santa or a hefty tax return, but it’s the most practical. 78% of Americans live paycheck to paycheck, and as noted during the 2019 Government Shutdown, the larger majority of population can not fund a $500 emergency. So setting up an emergency fund is crucial to preventing the loss of utilities, housing, transportation, love, marriage, health and much more.
Overspending on a wedding you can’t afford
In 2018, the average cost of a wedding in America was slightly above $30,000. Given that the average down payment on a home is now approximately $47,000, it seems like a simple choice. Starting out married life with a huge bill for a party is not the road to wedded bliss. A hefty down payment on a property however, could be!