Today could be the day that you get it all together and take the actions that will reverse your financial situation and put you on the road to wealth-building instead of scrambling to make ends meet. Maybe you have already made these financial mistakes and learned from them, or maybe you are continuing to make these mistakes without realizing what you are doing. Check out these 9 common money mistakes people wish they realized more early –

1. Misunderstanding credit cards

Whether it’s cash advances, large balances, only making minimum payments, paying late or not paying at all, the small piece of plastic can be much more trouble than you realized. There’s also signing up for too many, unnecessarily increasing your limit and wrecking your credit rating. Credit card debt is one of the biggest financial issues for young adults, with interest rates upto 30%. Did you know that when you don’t pay off your balances, you may wind up paying multifold the original amount of the item?

2. Not having emergency savings

Emergencies like- making ends meet while switching jobs, medical and dental emergencies, critical home/car repairs, etc happen to all of us. It’s doubtful that anyone is immune, however some people are much more prepared than others. Try to have 6 months of living expenses saved up as a safety net for the future. Investing may seem boring and confusing, but it can really benefit your finances. Ideally, you should save and invest a percentage of each paycheck or income source you have.

3. Failing to realize how “little things” add up

Although buying a couple of things here and there might not seem to have much significance, it can make a huge impact over time. Dinners, movies and drinks have become essential aspects of our lives, and we forget how easily our financial situation can take a turn. This puts one in a horrible position of being without any money if a salary check is delayed. Financial experts will tell you to go without your extras, such as daily coffees, for a couple months to save the extra cash and then start a debt elimination strategy. Before you know it, you will have a much more financially stable life.

4. Not having a budget

Not knowing how much you have can easily lead to spending more than you can afford. One of the main reasons behind frivolous spending is not having set a budget. A monthly financial budget helps you calculate how much you are supposed to spend in the entire month. Creating a family budget is not that difficult and will do wonders for your health and stress-level. For example, you can dedicate a specific amount to each of your family members and then strike the balance in income and expenditure.

5. Binge shopping

Avoid going shopping if you’re having a bad day – the temporary fix from emotional spending will pass quickly, but actually saving will leave you happier and more fulfilled in the long-term. The new iPhone or expensive nail extensions; can you really afford these costs on your current budget? It is important to treat yourself to things you love, but it is also important to sit down and work out if your outgoing expenses are too high. Before you buy a high-end, luxury product, ask yourself : Do I really need this? Buy only as much luxurious a house/car as you can afford.

6. Not having any retirement funds

Most young people think that retirement is simply too far away, so they can think of retirement savings later on. Actually, people grossly underestimate the true cost of retirement, and when and how much they should start saving.

7. Buying a house bigger than your budget

This is a disaster in ways more than one. Firstly, all your money goes up in paying EMI or loans. Secondly, There are other unforeseen expenses with the bigger house such as maintenance, property tax etc. Thirdly, it is all nothing but an undiversified investment which may or may not lead to as much rise in the value of the estate as the fund would have generated otherwise.

8. Saving everything for future

Not spending now is also as bad as spending everything you have. One has got to strike a balance between the two. Investing in yourself will give you better returns than you are expecting. Learning a new skill, vacationing with family or getting an insurance done will give you a sense of satisfaction and a healthy life.

9. Keeping most of the savings in bank

It may lead to bad interest rates when compared to returns of an investment which you could have made with the money. It’s like locking all the money for future generations to come but you lose an opportunity of growth there. People who roam around cashless may get spent too easily.

9 financial mistakes people make