Swetha is a role model for her whole family when it comes to money management. From her immediate family to distant cousins, a lot of people often come to her for advice, thanks to her track record of building and managing a respectable corpus from the time she had her first job. When people asked what she did right, she was of the opinion that the most important thing she did was not make certain personal finance mistakes. Let’s hear what those common money management mistakes are from Swetha so that you, too, are able to steer clear of them.

1.      Spending more than you earn

A lot of people are stuck in the habit of spending more than what they earn and credit cards are mostly to blame here. While a credit card is a useful tool in building a good credit score, it can harm both your credit score and financials if your credit utilisation goes out of hand. It can give you a false sense of security that you have more money than you actually have, which can make you spend more. One way to make sure you don’t make this personal finance mistake is by capping your credit utilisation at a minimum. Furthermore, make sure you thoroughly analyse how much money you earn and how much money you spend on a monthly basis so that you can effectively find where you are spending excessive money and plug those leaks. 

2.      Rushing to a milestone purchase 

Buying a home or a car is a milestone purchase for most but rushing to it might turn out to be a personal finance mistake. The reason here is that we often don’t make these purchases using a lump sum amount, rather we take out loans from a bank. A loan too early in your career may cost you more interest-wise. Plus, once you have taken out a loan, the scope of experimenting with your career also diminishes. Above all, you need a salary with which you can comfortably pay your loan’s Equated Monthly Instalments (EMIs). A lower salary could make you commit more money management mistakes and it could put you in more debt.

3.      Not starting to save

There is a popular Chinese saying that the best time to plant a tree was 20 years ago. The second-best time is now. This holds extremely true in the case of savings as well. The earlier you start to save, the better. It gives you more time to grow your money and you will have the liberty to experiment as well. A lot of people end up postponing the habit of saving regularly and it’s one of the worse money management mistakes you can make. Delaying can often leave you with no emergency funds even at a time of despair.

4.      Ignoring your credit score

No matter how much you try to be self-sufficient, a helping hand is often necessary, especially in the case of money. Sometimes it's for that dream house of yours or sometimes just to go on a dream vacation, we might have to depend on a bank to lend us money. For banks to do that, we need to have a good credit score. A credit score represents your credit repayment habits and building a healthy one is necessary for you to be eligible to obtain financial help in the future. Thus, ignoring your credit score becomes a personal finance mistake that you should avoid.

The right time is now

But what made Swetha different is the fact that not only did she avoid the common money management mistakes but she also started saving money early. Starting early has umpteen benefits, so make sure you don’t miss out on them. Find what investment or savings instrument works for you and start saving money today!