Unless you’re one of the fortunate ones, at some point in your journey through life you’ve endured the lifestyle of the broke, young and struggling. In these sour fiscal times, there’s a pretty good chance that you may be enjoying the disadvantages of the financially strapped at this very moment. Having said that, dig these tips to help you avoid making some of the following common fiscal faux pas that keep us dwelling in the den of debt:
Denial, Denial, and More Denial: Dictionary.com defines it as a disbelief in the existence or reality of a thing, which sounds about right if you find yourself spending like a person with an income 2 or 3 times greater than yours. The first step towards making positive change is accepting the truth, otherwise what chance do you have in changing your spending habits?
Abusing Credit Cards: The credit card industry depends on those who use credit to live beyond their means. If you can’t live below them, try living within your means at the very least. In the words of financial guru Lynnette Khalfani Cox, “Avoid trying to live what I call the ‘bling-bling’ lifestyle and guard against that temptation to ‘keep up with the Joneses.’”
Paying Too Much in Fees: $2.00 here, 3.50 there – it may not seem like much, but financial fees stack up and can drain your account like a sieve. Avoid frequent ATM charges by withdrawing cash at your own bank and whatever you do, pay your credit card bills on time. If the late fees don’t screw you, a 30% APR will.
Late or Non-Bill Payment: Not a good look unless you want the lifestyle of the broke and struggling your whole life through. The affect on your credit score and charges in late fees can lead to corporate banking enslavement and even bankruptcy in the long run – which really ain’t no joke.
What Budget?: If you are among the broke, young and struggling, the “term disposable” income is not a part of your vocabulary. Living on a limited income means that each and every penny has to be accounted for, unless you’re not averse to spending a little time in a homeless shelter. Creating a budget is a great tool that not only helps you to handle the logistics, can allow you to put aside the necessary funds for savings and recreation.
Refusal to Save: “Save your money” has got to be the most commonly used financial mantra. Some experts call it “paying yourself first,” but what it boils down to is that you consistently put a portion of your income (no matter how small) away for the future.
Second-Hand Aversion: No one’s saying you’ll never reach full baller status, but if you’re living paycheck to paycheck, buying a hot, reliable used car is much more sensible than a souped-up new joint. The same thoughtful spending tactic can be apply to the purchasing of books, clothes and furniture too.
Curb Your “Social Spending”: You work hard, and deserve to play hard – if you so choose, but party-people beware: these activities are the root cause of major financial hemorrhaging. Between the inflated prices of alcoholic beverages, bar food and gratuity, a simple night out on the town can rob you of a nice chunk of change. One suggestion? Get the best of both worlds. Start the party at home (unless you’re the designated driver). Happy hour can start at your crib where cocktails cost a fraction of the price to make, and taste just as good.
Let Your Kitchen Become a Ghost town: Speaking of inflated costs and tipping, another method of saving those ends involves eating out less, and cooking in more. You’re not a good cook? Here’s your chance to improve your culinary skills – and with the Internet at an added tool, you can find tons of simple recipes that can lead you on your way to eating an affordable gourmet meal within the comfort of your own home.
Miss Out on the Restaurant Meal-Share: Ok. This one may not be for everyone, however, it’s a good option to consider if you musthit the restaurant with a vacant wallet. Next time you and your meal companion dine out, try splitting a number of appetizers and one entrée. You may be surprised to find your appetite and budget quite satisfied.
Overspend on the Holidays: According to Lynnette Khalfani Cox, over-spending is the biggest source of debt for women in particular and advises us to spend more cash and try to leave the credit card at home when shopping over the holidays.
Overspend on Your Appearance: For women in particular, looking good is often equivalent to feeling good. Some women pride themselves on flawless hair or nails, being fashion forward or an airtight combination fabulousness from head to toe. Just remember that you don’t have to spend a fortune to look like one. Find ways to sustain facets of your own style to spare your wallet. It also helps to know where to uncover the best bargains.
Refusal to Get Health Coverage: Although reform is on the horizon, for the next few years, it’s business as usual as far as health plans go. In the meantime, it would be in your best interest to safeguard yourself by accepting your employer’s plan, or obtaining health coverage individually. It may seem like waste of money, but if by chance you become hospitalized without it, you could very well find yourself dangerously destitute for years to come.
Borrow From Family/Friends: This is a slippery slope because it carries the potential to cause bad blood between you and the ones you love, and it also keeps you trapped in the habit of creating debt rather than learning the lessons caused by a debt ridden life.
Insistence on living alone: You’re an adult and as such, you refuse to move back with the ‘rents. As a matter of fact, you aren’t tryin’ to share your living space with anyone. You’re within your right to do so, but if you’re spending the better part of your salary on your solitary abode, you could be doing yourself a disservice. Shared living can provide a major reduction in your monthly spending, allowing you the opportunity to put that money to positive long term use.