It goes without saying that you need to be pretty good with money when you’re the head of your household. The way you handle your finances will have a huge influence on how comfortable your home life is, how well you can support your children in the future, and how quickly you reach your personal goals. If you’ve never been that good with money and want to turn things around, here are some big mistakes you need to avoid…
Paying Down Debt with Savings
As I’m sure you know from experience, it’s way easier to withdraw money than it is to part with it! It’s simple enough to break into your savings in order to pay down your debt, but rebuilding those savings can be a mountain of a task. With the dark cloud of debt hanging over your head, I’m sure that taking out savings just to get rid of it may seem pretty appealing. You may not feel the sting immediately if you go ahead with this plan, but believe me, a few years down the line, you’ll regret it! Automating your debt payments from your paycheque, or simply being more disciplined with them, is always the better option.
Making Bad Investments
One of the most common ways that people hurt the state of their personal finances is making bad investments. For example, if you were to borrow money in order to pay for a car, you’ve pumped a fair amount of capital into a depreciating asset. The car is going to lose its value over time, and you’ll never fully recover the money you put into it. Sometimes bad investments are much more straightforward and subtle, and can only be recovered through something like a PPI claim. Whatever form they come in, bad investments need to be avoided like the plague! With every big investment you consider, take some time to think about whether or not you really need it, and whether your financial condition allows handling the loan with ease. If it’s absolutely necessary, in the case of a car or a roof over your head, then you can still help yourself by weighing up your options and choosing the most cost-effective one.