As pumpkin-spiced lattes and ghostly décor begin to hit the scene, one thing is certain: autumn is here! While we may not be feeling the cooler temperatures in Florida just yet, the sights, sounds and tastes of Spooky Season have officially arrived. In addition to ghouls and goblins, there is another fright lurking in the back of our heads at this time: not ending the year on a financially strong note. In this article, we share five scary money mistakes to avoid this fall so that you can enjoy more treats than tricks in your bank accounts!
Not creating a plan.
If you don’t have a budget in place, you don’t have a plan for how to maximize your dollars. Without that budget, it can be easier to make impulse purchases or lead with our “wants” over our “needs,” which can have a monstrous effect on our finances. Creating a budget can help you plan for the future and ultimately live your best life. One way to prioritize your spending is to identify your short-term, mid-term and long-term goals. By crafting your budget with these goals in mind, you can give your money more of a purpose.
Only making the minimum payments on credit cards.
One of the most common mistakes is to only make the minimum payments on credit cards when you are capable of paying those bills in full. There has been a misconception that carrying a balance helps to boost your credit, but that is simply not the case. By carrying a balance and only making minimum payments, you will end up paying much more in the long run, which we think is downright spooky! Because your amount owed makes up 30% of your credit score, you can also negatively affect your credit by carrying too high of a balance.
Not knowing what is on your credit report.
In 2020, it’s easier than ever to keep track of your credit and know what is being reported. Because fraudulent activity has been on the rise during the coronavirus pandemic, you can now request a free copy of your credit report from all three bureaus at AnnualCreditReport.com once a week through April 2021. Keeping an eye on your credit report will not only help you to make better borrowing decisions, but will also help you identify any fraud or identity theft early on and stop it in its tracks. Make sure all of the personal information on your credit report is accurate, and that you recognize all inquiries or accounts on your report.
Not saving for emergencies.
We often recommend a 50/30/20 rule when it comes to budgeting – allocate 50% of your expenses toward essentials, 30% toward lifestyle and 20% toward savings and debt repayment. It’s always important to have that rainy day fund to protect yourself from life’s unexpected frights. For some people, 20% may seem a little daunting, so adjust accordingly based on what you are able to save, and get in the habit of putting that money in savings each pay cycle. Any little bit that you can put away will make a difference. An easy way to make savings a part of your routine is to automate the process. You can set up an automatic transfer of funds from checking to savings each month, or if your employer allows, have part of your paycheck go directly into your savings account through your direct deposit.
Not keeping an eye on your accounts.
With mobile and online banking at our fingertips, you can easily keep track of your bank accounts and credit card transactions every day. It’s important to know what is in your account at all times for two reasons. One: By knowing your account balance, you can avoid unnecessary overdraft and courtesy pay fees (which can ultimately add up to more than the actual purchase you were trying to make!) and stick to your budget more effectively. Two: You can keep an eye out for fraudulent activity. The sooner you notice any purchases that you did not make, you can contact your financial institution, put passwords on your accounts and minimize the horrors of any potential damage that could have been caused.
Want to know more about avoiding bloodcurdling money mistakes and ending 2020 strong? Check out more resources from Addition Financial.
Valerie Moses is a Senior Relationship Manager at Addition Financial Credit Union, where she manages public relations and various Central Florida partnerships. When she is not at a community event or cheering on the UCF Knights, she can be found at her lifestyle and travel blog, Wellness & Wanderlust, along with her podcast of the same name.
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