I need help in understanding something. How is it that people keep making money mistakes? Are people slow learners?
I mean there is a wealth of information out there on how to make a budget, how to save money, how to not spend money, and so on.
So how is it that so many people get themselves into personal financial difficulties?
I can’t help but think that we start out from a young age not really understanding how money works. We don’t know how to save for purchases let alone save for retirement. A lot of us follow the example that is set by our parents.
One of the best things a parent can do for their kids is show them your paycheck. Show them the gross income and the net income. Explain where all the money goes.
Do you want your kids making some of the same money mistakes you have made? No, of course not.
Don’t Believe the Bank
One of the other reasons people make money mistakes is that they listen to their banker when it comes to borrowing money for large purchases such as buying a home.
The bank loves to lend money. This is how they make money. They will tell you that you can afford a more expensive house than is probably true. They are not taking into account all the extra expenses that seem to appear with buying a house such as a new furnace, rising utility costs and the new fridge you all of a sudden need.
So maybe we should aim for spending about 25% of our income on housing, not the 30 to 33% the bank says is okay.
High Interest Car Loans
And if you still have a high interest loan on a vehicle that is 5 years old or older what the hell are you thinking??
But this is the only way I can afford it, you cry. No, not really. You are probably paying a high interest rate on a used car that now has no warranty left on it. It makes no sense.
You may be better off using a line of credit with a lower interest rate to pay it off or better yet don’t have a car loan at all!!
We really should know better than to make these really silly money mistakes.
What money mistakes have you made?
Have you learned from them?
Please share this post and share your thoughts and tips in the comments.
Thanks and have an awesome day.