It can be a worry when dealing with finances that you may make the wrong choice, whether it be with an investment opportunity, a house purchase or other financial decisions. So, with Halloween around the corner, we thought that we would take a look at some of the nightmares that you should avoid with your finances, to help you in making the right decisions for you and your financial situation.
Taking charge of your own financial situation
Caution! The Green Eyed Monster
It is a natural thing to compare ourselves to other people’s situations, in all aspects of life, including finances. You may be looking at your neighbour’s nice new car, holiday plans abroad and private education for their children and wonder how you can reach the same position as them. The truth is though, that you should actually concentrate on what your own circumstances currently are. You won’t know the full situation of someone else’s finances. Perhaps they have a new car and lavish holiday plans, but no savings. You may have a standard car, low-key holiday plans, but have investments or savings for the future. Comparison is never healthy and can lead you into making the wrong decisions for your own financial situation, so be cautious of the green-eyed monster.
Greed Can Lead To Bad Scores
It’s a pretty obvious statement to make, “Only spend what you have”, but there is still a big issue over debt. Of course, many people take out credit cards or buy items such as cars or sofas on finance. There is no issue with this if you have a payment plan that works within your current financial situation. However, constantly making purchases using a credit card, and not paying off at least the minimum payments each month may see you in a sticky situation further down the line, and can also affect your credit rating.
No Rainy Day Fund
Not everyone can afford to save a vast amount each month, but anything that you can save is better than nothing. Sometimes things will happen such as car repairs, house maintenance or other unexpected payments so it’s good to have made some provision for such occurrences. If not, you may be using credit cards to pay for these things, which can create a slippery slope if you are not careful.
No Budget Awareness
We have talked about how to create a budget in a previous blog, as it really is a good idea to give you transparency over what finances you actually have on a monthly basis. This will help you with financial planning and also stop overspending. Having an awareness of what you can actually afford rather than what you think you can afford will put you in a better financial situation.
Sitting on a Goldmine
It is a good idea if you do have some money, to invest it somewhere, making your money work for you. Whether you invest in property, stocks and shares or other investments, before doing anything do your research and find out what options are open to you. Putting your finances into an investment will allow your money to grow, although there are some inevitable risks attached.
No Room for Emotions With Finances
Emotions have no place when dealing with finances. There is no point in keeping hold of the first house you invested in because it holds emotional value to you, if it is not financially worth it. It is important to keep to a pragmatic approach when dealing with your finances in order to avoid emotions from clouding your judgements.
If you want to avoid these nightmares and would like some further advice on how to, our trusted and knowledgeable advisors at Cotswold Financial Planning are here to assist you in your financial queries. Contact us on 01608 651608 or via our enquiry form and we will be happy to discuss your requirements.