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Most singles have the opportunity to spend their money as freely as they choose, but living on the edge of each paycheck can also amount to falling off a financial cliff at some point. Being single is the perfect time to begin building a stable financial future for yourself and to share with whoever may come along. If you want to ensure a secure future on stable ground, don’t make the five common mistakes that many other singles do and learn how to manage your money now so you won’t have to regret any financial errors later.
1. Living Paycheck to Paycheck
Sometimes, it’s inevitable—your bills and spending needs for the month are about even with your monthly earnings. Yet, if this pattern becomes a monthly habit, you’ll never save money for long-term items like a home, a car, or even an airfare ticket. Money in the bank may sound like old-fashioned advice, but it never goes out of style. Adjust your spending habits in order to have some money left over each month that you can deposit in a savings account or money market. It’s nice to see a cushion at the end of the month, but it shouldn’t burn a hole in your pocket. Many singles blow their extra funds on concert tickets, new clothes, or get-away weekends, but if you can refrain, you’ll see just how much that little extra becomes in half a year’s time.
2. Failing to Track Expenses Whoa—that feeling when you check your balance at the end of the month and felt sure there’d be more in that checking account than three dollars. It’s a common mistake that singles make when they forget to deduct those twenty-dollar ATM stops or forget that those five-dollar daily coffee stops really do add up. Whether you track your expenses on a software program or enter them in a log, it is truly important to check where your money goes. Use your bank’s online banking features to watch over your accounts on a weekly basis. While it’s fiscally responsible to track where your money goes, it’s also a safety measure—make sure your direct deposit payment got to you on time, make sure there are no mysterious deductions, make sure you know how much money you have on hand in the event of an emergency.
3. What’s a Budget?
Often singles either don’t create a budget or they don’t commit to one. For most people everywhere, budgeting is just a fact of life. Budgeting goes hand in hand with tracking your expenses, but it also provides a framework for controlling what, where, and who you pay. If you don’t want to be a slave to your credit card company, budget in a way that allows you to pay them off and get them off your radar. Budgeting allows you to save money when you stick to your line items and don’t go overboard on ordering out or purchasing non-essentials. When you budget, you can also plan ahead for items you know you’ll need like annual insurance premiums, car repairs, or even a much-needed vacation. Budgeting gives you real financial control and freedom.
4. Credit Cards
Racking up your charge cards does not equal financial freedom. You’ll pay and you’ll pay and you’ll pay for that convenience if you are like many singles today. Credit cards are great for an emergency and can be incredibly convenient, but try not to let those balances get out of hand. It’s best to pay off your balances as soon as possible to avoid interest charges. Out-of-control credit card spending, however, has ruined more financial futures and wrecked more personal credit profiles than one might think. Avoid buying on credit as a habit unless you can completely commit to paying off that balance or keeping it under tight control.
5. High Life
You might be able to afford that leather couch and 50-inch plasma television, but you might be better off taking the money for those items and letting it grow in a safe investment plan or money market. One can live frugally and stylishly. It’s tempting to buy many creature comforts when the money is in hand, but it also makes sense to accumulate items on a sensible budget plan and know that you are paying sensible prices. Remember, just because the bank says you can spend such and such amount on a house or car, doesn’t mean you have to! Live well within your means so you always have money when you need it or for later in life. Economies change, health changes, families happen—believe it or not, an $800 television can be just as entertaining as a $2,500 one when you know you have that extra money well-invested and tied into your strong financial future.
Guest post was contributed by Hayley Russell on behalf of SunbirdFX.com – Hayley is a freelance financial writer that has worked extensively as a FX trader. For information on trading Forex with Elliott waves, visit the website.