We’ve all heard the tips on how to save money but what about the sneaky traps that are making us go broke?
In fact, you’re probably doing some of the things on this list and not even realising that it’s damaging your financial situation.
Here’s some tips.
1. Using multiple credit cards
Did you know that Australians have racked up about $32 billion owing on credit cards this year?
Not being in control of your credit cards is a dangerous slippery slope that could lead you into big trouble – especially if you’re paying a high rate of interest.
Having multiple credit cards is nothing to be worried about but if they are all max’ed out then that’s a big concern.
First step to financial recovery and gaining control of your credit is to resist the urge to apply for a new card every time your current cards are max’ed out. Second step is lower your credit card limit and start paying off your debts.
2. Ignoring the elephant in the room
Being in denial about your financial situation is a sure way to make you go broke.
Most credit cards charge more than 20 per cent interest and if you’re paying just the minimum repayments it could take you over 25 years to pay off your debt (did you know that!).
It’s time to stop opting for the minimum repayment (even though the banks want you to do this!) and time to think smarter and come up with a repayment plan that will help clear your debt and fix your bad finances.
3. Living a lifestyle you can’t afford
The big house, fancy car, designer clothes, back-to-back holidays… while we all may want these things, it’s important to be realistic about what you can afford.
Applying for an unreasonable loan or charging up a fortune on your credit card is easy to do in the moment but when the mortgage and other bills start coming in, reality sets in.
Stop comparing yourself to those around you and trying to match or one-better what they have.
This advice also applies to buying expensive presents when it’s not within your means. Does your wife really need an expensive Christmas present like the new iPhone X or latest Fitbit?
You may want to appear generous among your family and friends but thinking you have more money than you actually have is a big money trap, when you know you even struggle to provide your kids wit a stroller from the Baby Stroller Reviews.
4. Taking advice from people who think they know it all (but they don’t)
When it comes to financial planning, it’s best to leave it to the experts. Just because your neighbours have leveraged their mortgage to buy another investment property, and have persuaded you to do the same, doesn’t mean it’s a right fit for your financial situation.
Talk to an accredited financial professional about planning for your future before getting any potentially bad ideas from people who are clueless about your money standing.
5. Expecting a bailout from the bank of mum and dad
It’s become more and more common for parents to help their children buy their first home or bail them out from a debt trap.
That’s a great relief if you’re able to fall back on mum and dad’s generosity, however, it’s important to learn from your mistakes or history will just repeat itself and you’ll fall back into debt after receiving a handout.
If you find that you’re doing one, two or all five things on this list, don’t worry there’s still time to fix your money situation.
It all comes down to taking your spending and saving habits very seriously.
Talk to a financial advisor – it can’t hurt and might be the motivation you need to get you on the right track.