Are You Your Worst Financial Enemy?

We all have big financial goals and milestones that we want to reach. The economy may be tough and your job may not be paying as much as you’d like, but often, our worst financial enemy is ourselves. If you want to reach those goals faster, you need to be critical about the way you’re spending. Here, I’ve listed some common wasteful habits that countless people need to drop.

Staying Loyal to Brand Names

With the sheer amount of advertising that we’re bombarded with, it can be easy to believe that brand name products will always give us more for our money, without counting the cost. This is especially true when it comes to clothes shopping, which is covered more in this Yahoo finance article. The next time you do your regular grocery shop, try substituting a few brand names for more generic, affordable products. Yes, the quality may not always be what you’re used to, but you’d be surprised at some of the hidden gems you’ll find.

Regularly Changing your Oil

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Credit: Wikimedia

Okay, so staying on top of routine car maintenance is a good habit, and can save you a small fortune by avoiding hefty mechanic’s fees. However, if you’re changing the oil in a modern car for every 3,000 miles it clocks, you could be wasting a lot of money. This is because many of the latest cars to come out can run on synthetic oil, which can be good for 8,000 miles or more. Obviously, you should always do your research, and make sure that your car can run on longer-lasting oils and still perform well.

Drinking Bottled Spring Water

If you always make a point of getting your recommended water intake, then great! However, if you always buy bottled water from a store, rather than simply refilling a bottle with tap water, it could mean the difference between spending a few hundred pounds a year or a couple of quid. I’m pretty lucky in that my area’s tap water tastes crisp and clean. I for one can’t tell the difference between the bottles you find in a store’s fridge and the one that I fill up before I leave the house. However, even if your tap water has a twinge of chlorine to it, simply refrigerating it can make a huge difference.

Eating Out

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Credit: Pexels

I’m not saying you can never set foot in a restaurant again. After a lot of hard work, treating yourself to an exquisite meal at a great restaurant is one luxury that you should really make time for. However, eating out should never be a regular habit. If you get used to eating in your favourite restaurants every few days, it can be very hard to break the habit, and it will keep haemorrhaging money. You may not be an expert chef, but cooking good food can be much easier than you’d expect. Furthermore, when you make this one change in your dining habits, the amount you’ll save will encourage you to spend more time in the kitchen, and less looking at menus!

Financial Errors Which Will Affect Your Kid’s Future!

It’s so important that we teach kids about the importance of finance as they are growing up. That way, we can feel assured they will go on to have debt-free lives in the future. And our children tend to follow in our footsteps, so we need to be good role models for them. As well as ensuring we leave enough money for them to have great lives, even when we aren’t around anymore. Therefore, don’t make these financial errors which will affect your kid’s future!

Spending too much of your savings

Before you take money out of your savings account, you need to think carefully about whether it’s the right decision. After all, its money which could be going towards your child’s future. And you don’t want to look back and regret wasting money on meaningless things. After all, it’s so easy to keep taking money out of this account when you need to buy things for your family. But for the sake of your kid’s future, only spend savings if you really need to. Otherwise, rely on your current account and keep your savings safe for the future.

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Taking on a too high mortgage

We often can get swept up in the moment when looking at a great house. And rather than thinking about the costs, we consider how perfect it will be for our family. But you don’t want to end up wishing down the line that you never bought the house as the mortgage repayments are too large. In fact, you might get in a position where you think ‘I need to sell my house fast’. After all, it’s so easy to get into debt if you miss a couple of repayments and then you might end up in the position of getting the house taken off you. And then your child’s future will be in jeopardy. Therefore, always think carefully before taking on a large mortgage. Get financial advice first to ensure you are making a wise decision when buying property.

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Image from Pixabay

Not getting life insurance

A lot of people don’t get life insurance. They think they won’t need it as they are young, and the payments are too large. But if something happened to you, and you have no life insurance cover, your children might end up with little money for their future. After all, most life insurance plans will pay out a significant sum to you family if something unexpected happened to you. And that money will help your kids to continue having a good life. Therefore, you need to ensure you are covered for the sake of your child’s future. And for the sake of your kids, make sure you get a will too. After all, this will ensure your wealth and estate end up in the right hands after your passing. And as we said before, without one, your inheritance might not match your personal preference. Therefore, get this sorted at a solicitors as soon as possible.

And make sure you set up an account for your kid sooner rather than later. You can put money in there which they can use when they are old enough to put towards things like college and their first home!

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The 7 Money Mistakes That Parents Make

parent's money mistakesWhen it comes to teaching your children about money, there is no single right way. There are, however, things you can do to guide them along a path and empower them to learn good financial habits. Below are 7 common mistakes that parents make when teaching good financial skills and habits to their children.

Money Mistake 1 – Pocket Money.
A danger with automatically giving pocket money is that it can create an entitlement mentality.

A young person having money of their own however is an important rite of passage and can form the basis of excellent financial education in budgeting, saving and spending.

One of my favourite money experts, Loral Langemeier is emphatic on the subject:
“NEVER PAY YOUR KIDS AN ALLOWANCE”
She argues that the best investment you can give your child is to teach them the value of entrepreneurship and the way that every economy in the world works. So instead of paying pocket money every week, design exercises and activities that are truly focused on basic finance.
Martin Lewis founder of Money Saving Expert is a fan of both pocket money and financial education – and he recommends encouraging children to work for their financial rewards, in order to embed a principle that will serve them well throughout life.

Money Mistake 2 – Not Talking About Money
Stay silent about money and you risk leaving your children open to the pitches of TV adverts and peer pressure.
Parents are the main source of money information for children, but 74% of parents are reluctant to discuss family finances with their kids, according to the 2014 T. Rowe Price Parents, Kids, and Money Survey.
Even if money is tight, don’t stress about it in silence.
When parents are worried about money but are not communicating their financial situation, children pick up on the anxiety and associate it broadly with finances. Rather than learning money lessons from their parent’s mistakes or situation, children instead learn that money is ‘stressful’ and ‘bad’.

Money Mistake 3 – Magical Credit Cards
Studies have shown that people spend 30% more when they use cards instead of cash. When you’re using plastic, it’s easier to ignore how much money you’re really burning through.
Credit cards not only wreak havoc on our budget, but also set a bad example for our children. Kids seeing cards being swiped and in the child’s eyes, you haven’t exchanged anything for your purchases.
Children need to understand that when we buy something, the money we’ve spent is actually gone. There are alternatives; using cash everyday instead will give your child a more realistic picture of how money works. Or when you spend using a card take some time to explain that that creates either a bill, which has to be paid, or is taking the money from your bank account as in the case of a debit card.

Money Mistake 4 – Setting a Bad Example
How can we expect our children to save money for the future when we don’t do it ourselves?
It’s very important that not only is saving a habit but a highly visible one.
This can include a savings jar prominent in the home, labelled with the holiday, event or purpose that it’s for. If your kids at whatever age see you putting your spare change in the jar on a regular basis they may get the bug and start saving themselves.

Money Mistake 5 – Saying Yes for an Easy Life
Many parents are actively teaching their kids about money – but their children are learning all the wrong lessons.
David Bach author of the Automatic Millionaire believes that the biggest mistakes that parents make is not saying ‘no’.
“I will go to someone’s home that is $30,000 in debt and their children have piles and piles of toys. This creates children who don’t know how to hear the word ‘no’ and they become adults who want instant gratification and live beyond their means. Plus, they miss crucial lessons like budgeting, prioritising desires and saving for something valuable”.
Never forget your great influence as a parent.

Money Mistake 6 – Not letting them fail
How often do we rescue our kids when they make a financial blunder? No-one wants to see their child fall down, literally or metaphorically but by always bailing them out we rob them of the chance to learn from their mistakes.
Fast forward to the teenage years and you may become accustomed to paying off mobile phone bills, covering car insurance or in one case I heard of re-mortgaging your home to pay off a child’s payday loan debts.

Money Mistake 7 – Mind your Language
Children make many requests every day. Parents will often deflect another purchase request by saying “I don’t have enough money on me” or “we can’t afford that”.
The language used to explain this to a child is very important.
An honest dialogue with positive language will get you positive results. Explaining why you’re not making the purchase gets kids thinking about prioritising their wants and teaches them to be more aware shoppers in general.
Rather than saying we can’t afford it try how can we afford it? This gets the young person thinking about ways in which they can take charge of the situation rather than being a victim of circumstance.

This article is an extract from Daniel Britton’s book The “7 Money Mistakes That Parents Make” an eBook version is available for a limited time free from the Personal Finance Academy website