Common Money Mistakes that Families Make – and How to Avoid Them

When you have children and a family to support, it’s important to be extra careful with how you spend money. The littlest change can end up making a very big difference in your overall expenses and your money habits really do add up after a while.

License: Creative Commons image source
License: Creative Commons image source

However, many families are trapped in bad money habits and make a lot of mistakes when it comes to their finances. This means that they have less money left over every month and they struggle to make ends meet. If you can avoid these money mistakes, you will be able to improve your financial situation for your family.

Living Beyond Your Means

When it comes down to it, there is no magic to finances – it’s simple math. If you spend more than you earn, you won’t have any left over and you will find yourself deeper and deeper in debt. Take a look at your expenses right now and determine whether your spending is less that your earnings. If you are spending more money than you are earning, it is essential to free yourself from that financial obligation so that you can live within your means.

Not Having an Emergency Fund

If your car broke down, your plumbing stopped working or you needed to cover some other emergency expense, would you be able to take the money out of your savings or would you have to go into debt to fix it? Many families are living paycheque to paycheque without an emergency fund and are only one disaster away from being trapped in debt. It’s tough to save up money when you have a lot of family expenses, but every month do your best so that you can cut back on your expenses and have a little bit of money left over to put into a savings account. That emergency savings will help to bail you out when something goes wrong – avoiding the debt trap.

Trying to Keep Up With the Joneses

This is a classic mistake that many families make, which can really get you in a lot of financial trouble. It’s tempting to want to fit in with others and to impress your neighbours and friends with your purchases, but avoid buying things on the basis of what other people think. You should only make purchases according to what you can afford and what is practical, enjoyable or useful for you, not anyone else. If your friends are true friends, they won’t judge you on superficial things but rather on the content of your character and the pleasure of your company.

Not Taking Advantage of Coupons and Discounts

Many families make the mistake of thinking that it is too time consuming and not worth it to search for coupons and discounts on the items that they purchase. However, they don’t realise how much money they could actually save if they took the time to shop using coupons. There are thousands of coupons available online for almost every product available, so it’s worth taking a look to see what you can save.

Using Your Home as a Credit Card

Sometimes tapping into your home equity can be a smart financial decision, but some people have started borrowing against their home in order to buy a vacation, a fancy new car or even expensive dinners out. This is a very foolish financial move and a recipe for disaster. What happens when you get ill, or you lose your job? You will have a large line of equity in addition to your mortgage and you will be putting a lot of pressure on yourself. Also, over the years you will see the interest rates rise on your home equity loan, which can make it even more difficult to pay it off. If you get yourself in a really dire situation, you might even have to sell your home to pay off your lender.

These are just a few of the common mistakes that many families make when it comes to budgeting, spending and finances. If you and your family can avoid these errors, you will be well on your way to a more financially secure future.

About the Author: Russell Matthews uses his maths skills and frugal living ideas – such as using coupons from the likes of SumoCoupon to save his household lots of money every month.

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