Not having savings habits and postponing debt repayments are some examples of negative behaviors that can lead to over-indebtedness. Many of these errors stem from the lack of financial literacy received by consumers throughout life. Get to know some of the most common myths that can make you lose money and control your personal finances. Criticism at http://dudubluelagoon.com
1. “I can not save”
The hardest is to start. Putting aside a small amount of money, like the cash left over from the wallet at the end of the week, is a first step in that direction. If you can save ten euros every month it is a start for those who want to start a savings but have little income to do so. To achieve this goal it is important that you make a family budget to reduce the excessive spending you may be committing.
2. “I want my children to have everything I did not have”
Saying no to your children is a way to educate them financially. This is because gifts, toys or other objects have a cost that can not always be borne by parents. Also, giving everything your child wants is giving you unhealthy habits. Hearing a “no” from time to time, with due justification, can make your child value certain objects when they receive them and encourage him to save enough money to have what he wants.
3. “My car is an investment”
Having the idea that buying a new car is safer or that it is an investment for the future is a frequent idea. However, this is not always the best option for all families. Remember that in most cases, the purchase of a new car implies the hiring of a car loan that can be extended for several years and will have a considerable weight in the family budget. That is why it is vital that you get a car that suits the size of your wallet. In addition, you will have to account for the devaluation effect of the car: If you buy a new car and want to sell it soon it could mean a 20% depreciation against the purchase price. That is, you will never be able to sell your car for the same price that you bought it.
4. “Pay Later”
Credit card can be a good tool in managing the personal finances of consumers. But customarily using credit cards to make purchases, it can become a headache at the end of the month for those who do not control the payments made with this means of payment. Remember that there are two modes of payment of cards: You can pay your debt at 100% or just one installment. If you opt for the first hypothesis, the debt gets settled and you do not have to pay interest. If you choose the second option and pay only a portion of your debt you will have to pay interest on the amount that is not settled. Do not forget that you will have to make a minimum payment of 10% on the amount of debt.
5. “I deserve”
For those who already have debts, choosing to spend a luxury vacation or allowing yourself to be consumed can be a big problem: at the end of the experience, the luxuries have to be paid. In these cases, it is necessary to have patience. If you want to get out of debt, it is important that you have a strict discipline in managing your family budget so that you do not spend more than you earn and you can keep paying your charges. If you have a high effort rate (greater than 35%) it’s a warning sign to get your finances in order. Otherwise you are at risk of default.
6. “I will receive an inheritance”
Making expenses today to think about the money you will receive in the future – whether by an inheritance, a gambling bonus or even IRS repayment – is not a healthy personal finance strategy. Without realizing it you may be overindulging. Regardless of the income you have at present (or you may have in the future) it is vital that all consumers have an emergency fund to guarantee the payment of household expenses over a period of six to 12 months. Do not forget that you may suffer a setback in your life (such as unemployment, divorce or illness) that may jeopardize the fulfillment of your duties.