5 red flags that you are managing your finances wrong

Efficient management of your personal finances helps prudently using our money, making us more conscious of the efforts that mean working for a salary to acquire those things that make us happy. However, not many people use part of their time learning about the status of their family’s economy. In fact, some people are completely unaware of their account statement status and spend their money without knowing if they can afford to do so.

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You might believe that, by surviving each month, you are already doing good. But there are a few red flags that can warn you about some habits you might correct so you can feel that you have your finances under control.

Spending more money than what you are making

You might combine your salary with your family’s for services and things related to the house, while the remains of the money that you make might be used without any control. Basically, you might buy things with your credit card that cost more money than what you make monthly. This is a clear sign that something is wrong, you should NEVER have more expenses than income.

Paying your credit card interest every month

Logically, for one or two months you can’t pay the total debt you have on yourcredit card. Nevertheless, this shouldn’t become a habit. When buying things through a credit card we must be aware that we will have to pay the total amount of money spent within a month. You can pay the minimum required, but it is better not to do so each month because of the accumulation of interests that end up costing us more money. This situation warns us that we are not using our credit cards responsibly.

Not knowing how much money goes to taxes

If your employer discounts tax directly from your salary, you must know how much you pay on taxes. The same thing applies when you are independent and you have to manage this, you must know how much money you have to set aside to fulfill the government’s regulations.

Not recognizing the spending displayed on your bank statement

One of the biggest mistakes that people make is to avoid checking their account statements to know all the transactions that have been made. If whenever you revise your bank account, you don’t recognize none of the automatic payments that you have made and you don’t remember buying things in some stores, it is obvious that something is going wrong. Learning how your money flows also helps to prevent fraud.

Buying things without planning and that you won’t use

Impulse buying, most of the time, means that you acquire products that you don’t need nor use. When you don’t plan around shopping for those things that you want to buy, you will end up having an absurd amount of elements that are not used because they aren’t needed.

Creating a budget allows solving, little by little, some of these problems. Through creating a monthly budget that shows incomes vs. spendings and a conscious investment of money you will have more information for decision-making around your finances.

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