Financial mistakes that cost happiness

We’ve all been in a position where we’ve bought something we didn’t really need or spent too much on a trip aboard, but those mistakes are easy to make up for. What you don’t want to do is make the kind of financial mistake that can hurt you for years. Money can’t buy you happiness, but it can have a huge impact on your happiness if it causes the kind of stress and strain that permeates other areas of your life.

With a little forewarning and self-discipline, you can avoid these mistakes.

Pu ing off saving

People tend to put off saving because they feel they aren’t yet earning enough. But as you earn more, your expenses tend to grow and saving becomes less of a pri- ority. This mentality leads to a dangerous cycle of not saving. You can start today even if you start small. Your first task should be to build up an emergency fund so you don’t have to rely on a loan if you are faced with an unexpected expense.

Failing to pay off credit cards in full

Having a credit card is a good way of building up a credit history, and it can come in handy if an emergency expense exceeds the amount you have in your emergency fund.

However, credit cards should be used with caution. It’s easy to forget the cost of credit and dig yourself into a very deep hole.

Make sure you stay well within your credit limit and what you can afford. And when you make a payment to your credit card account, do so in full. Paying the minimum each month only results in you paying more interest and establishes a habit that could damage your credit score.

Borrowing for non-essentials

By now, you know that an emergency fund is crucial for most emergency expenses and that a credit card can be used to establish a healthy credit history and bridge the gap between what you have in your emergency fund and what you might need one day.

But you need to be careful about what you borrow money for. Borrowing for non-essentials, like luxuries, will limit your access to credit when you really need it.

Ge ing blacklisted

Getting blacklisted makes it very difficult to apply for a loan and it will definitely increase the cost of borrowing if you do have to take out a loan. Worse, it might force you to take a loan from a loan shark. If you are blacklisted, make it a priority to restore your credit score as quickly as possible.

Failing to communicate with your partner about money matters

Money can put strain on even the most solid of relationships. Be honest about your finances with your partner from the get-go.

Your financial success as a couple is based on having discussions around your financial past and future. Everyone deals with (and views) money differently, and talking about it will help you to set up a healthy financial framework to work from in your relationship.

Ignoring your partner’s needs and goals

Do yourself, your partner and your relationship a favour and recognise their needs and financial goals. Listen to your partner’s needs and wants and think about them carefully. A budget plan that you create needs to meet both of your goals.

Spending all your money on your children

It’s easy to get swept up in your children’s needs and want to give them everything you can.

But it’s very important to be conscious of how much you spend on them and how much you are saving for your future, because you should save as much as possible.

There are ways to save when it comes to kids, even down to university fees. From scholarships to getting them to contribute by working, there’s a way to make it work for everyone.

Shirley Smith is COO at Old Mutual Finance; This was first published on Old Mutual Finance’s blog