Mistakes To Avoid

Personal finance can be defined as the use of finances towards the monetary decisions of a family or an individual person, not a business, in short. Personal finance tells in what ways an individual person or family obtains money, makes a budget, saves, and expends financial resources in the span of time considering several financial risks and future security. Thus personal finance plays an important economic role in our lives and hence we should be careful while dealing with it. Below mentioned mistakes should be avoided in matters of personal finance:
Use Your Credit Card Judiciously: credit cards are the easiest and fastest loans but at times turn out to be the costliest. One must ensure that he/she pays all bills within the prescribed period (usually called a cycle) because afterwards, an interest (commonly15-20%) is charged by banks. Just one credit card is enough for your use and always prefer cash while paying bills.

Pay The Bills Of Shopping Immediately: Nowadays several shopkeepers offer easy monthly installments (EMIs) on their products. However EMIs increase the cost of product and people are made to believe that they just have to shell out little amount every month to get their hands on a product. You should never ever fall in this trap.

Prefer Buying What You Can Easily Afford: spend within your limits and always spend less than what you earn. Financing an electric appliance, an electronic gadget or a car to just indulge in luxury should not be encouraged. If you want luxury, then buy it only if you can afford it yourself.

Prefer Cost Effective Stores: A grocery store in a centrally air-conditioned mall in a posh area will definitely sell items costly. Prefer low-key stores which only offer quality and not pomp and show.

Budget: Budget is of an utmost importance for an individual as well as for a family. Plan your expenses and strictly abide by them. Don’t spend even a cent beyond what you planned in your budget. In case of a family, this is the responsibility of parents to teach importance of budget to their children.

Invest Your Money Wisely: One must be financially literate so that he/she can take wise investment decision. One must not invest all his money in share market and invest it into fixed instruments. One must keep his needs and wants in view before investing in ventures and projects. A man who needs a lot of money for immediate tasks should never put his money in the share market as it is risky but a young boy who has no dependents can take  such a risk.

Analyze Your Income: One must analyze his/her income and plan expenditure according to it. If your income is burdened by a membership fee of a gym or club then straight away avoid it. If you are spending more than average on your mobile phone bills then you should cut down your expenses. Be practical and realistic in spending money.

Record Your Expenses: Note down each and every expenditure in a diary or month- wise fashion and keep a record of your finances.