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Mar 24

4 Danger Signs to Watch out for if you want to secure Your Personal Finances

Posted by at 22:07 | Default | Comments(5) | Reads(1475)

You might not be able to know what the future holds, but when it comes to personal finances; it’s possible to tell when you are about to head into a disaster.

With every spending that you make, you always leave clues that show you why you shouldn’t have spent your money in that way. However, it is human to repeat mistakes.  

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Before spending in the future, watch out for the danger signs listed below and you might avoid getting yourself into a financial mess:

1.  Spending based on the advice of others

The people around you, such as your colleagues, your spouse or friends, could influence you to spend.

People around you could be urging you towards the latest vehicle offers. They even tell you that you can charge the car on your credit card or you can use your home equity to get a loan to buy it. What they never tell you is how you are going to pay back the big debt on an income that you have probably extended.

The only person who should influence you to spend is you. If you have a spouse and you make spending decisions together, discuss what spending on a certain item means to both of you.

An even bigger spending trap for most people is investment spending. It is very tempting to jump on an investment opportunity based on the advice of your friends, just because you don’t want to miss out.

If you want to invest, talk to a professional. Professional investment advisors might even tell you not to invest in that opportunity as it’s not the right one for you.

2.  Spending without relevant information

Every spending move has consequences. They could be positive or negative. Before you spend, list down the number of things that could go wrong.
It is also good to understand the ins and outs of any financial facilities that you might want to access. For instance, before you apply for a mortgage, read extensively about mortgages. Learn about the different type of mortgage arrangements available. Research about interest rates and payment terms and how all these will affect your finances.

It pays to learn more about loans, mortgages and credit cards by consulting credit experts. You can also attend a short class on financial matters or even consult a credit counselor to get unbiased advice about money management.

3.  Spending on wants

Spending on wants is one of the most common reasons for debt problems. If you buy the latest car because you want it, you are heading for some real trouble.  

Having access to credit cards makes it easy to respond to every inclination you get to buy stuff. Limit your spending only to practical things and avoid splurging just because your credit card allows you to.

4.  You are feeling stressed

If you feel pressured when considering a purchase, go home and sleep on it for a couple of days. To get some good perspective, write down the pros and cons of the purchase.

That feeling of stress that you experience is your gut. Follow your gut instinct. Even if you have ignored all other signs, do not ignore your gut.

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