As kids and teens, many of us have seen our parents struggling to manage money properly. Not everybody’s parents are like this, but many parents make some common money mistakes. Here are some of them and try not to repeat them in your life.
Not lived on budget
Do you remember your parents creating annual budget plan and setting realistic goals? Did they put a separate book for tracking the income and all expenses (each and every expense)? If you haven't seen them doing so, don't repeat the same mistake. Budget gives you a clear idea of where your money is going and helps you manage your money properly. Remember, you don’t need comprehensive budgeting software to track your expenses; a pen and a book are more than enough.
Not paid bills on time
How many times have you seen your parents paying bills after ‘due dates’? They run around to pay the bills at the last hour, eventually pay late fee or interest charges. There are many parents who delay monthly bills like utility bills, credit card bills, etc. The moment you get your salary, take out money for monthly bills and pay them ahead of the due date.
No emergency cash
Do you remember your parents running around friends and relatives for money during emergencies? Don’t worry, your parents are not alone, many parents are not prepared for emergency situations. They don’t save enough for unexpected situations. Isn't it sensible to be prepared for such situations, where you don't have to knock every door for money? Therefore, make sure that you have some amount ready for emergency situations. As a rule of thumb, you need to have at least 6 months’ living expenses as emergency cash.
Again, we would like to remind you that all parents are not like this. But many of them make these mistakes.
Improper usage of credit cards
Many parents have issues maintaining credit cards properly. The convenience offered by credit cards makes parents shop impulsively. You might have seen your parents using credit card even for everyday purchases like food and clothing. Many parents also get in to the habit of minimum payments – this leads them to pay more interest amount. As a sensible person, you need to decide what you want and what you need. Use credit for thing which you need badly. Maintain your credit score properly so that you don’t have any issues while applying new card or a loan.
Taken unnecessary loans
Personal loan is an emergency tool. If you don’t have any other option, you should go for personal loan. But many parents take loan because they are eligible for it. The moment a bank offers loan, they take it without any second thought. Sometimes, they take more than what is required because it is being offered without thinking much about repayment. Beware of this and stay away from personal loans. Make sure that you are continuously building your emergency cash. Take personal loan only if it is very important and you don’t have any other option.
Not every parent may have committed every mistake mentioned here, but there are some common money related mistakes that parents generally make. Be aware and try to avoid them as much as possible to lead a sensible financial life.
Money Chutney provides insightful articles on saving, investing, budgeting and financial planning. These articles are intended to provide knowledge and make people aware of methods and techniques on personal finance, so they can use it to better their financial situation. These personal finance strategies are targeted towards educated middle class people in India, who typically look for information on how to save money.