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Wondering why you can't get your budget on track? Chances are, you're making at least one of the money mistakes that follow. Whether it's a tiny misstep, like buying your kids new Halloween costumes year after year, or a major no-no, like ignoring your credit score, these faux pas can keep you from achieving financial security. Below, experts share the nine most common cash flubs and their savvy solutions for them, which will help you get a handle on your finances once and for all.
Bad Habit #1: Setting a budget that's too strict.
Like a super-strict diet, a super-strict budget will eventually lead you to "cheat."
Savvy Solution: Start by cutting back in just one area. Debt management expert Clarky Davis (a.k.a. The Debt Diva) suggests looking for ways to trim your grocery bill-you might try shopping with coupons and adding some store-brand items to your cart. Once you're comfortable with your new supermarket routine, you can start looking to save in additional areas. Photo: UpperCut Images/Getty ImagesSave at the supermarket thanks to these 10 secrets from the "Coupon Queen."
Bad Habit #2: Only using the coupons from the Sunday paper.
There are hundreds of deals to be had online.
Savvy Solution: Clipping paper coupons is a good start, but the real money-savers are online, Davis says. Sign up with social networking sites, like Facebook and Twitter. Search for your favorite stores, then click "Like" to get updates on their sales and promotions. You never know what savings you might come across. For example, Old Navy recently shared a 20 percent discount code and Target offered a coupon code for 15 percent off-both via Facebook. Photo: Thinkstock
Bad Habit #3: Buying brand-new when there are less expensive options to be had.
Whether it's a casual swap with a neighbor or a gently-used item listed on Freecycle.org, free is always a smarter way to go.
Savvy Solution: The days of heading to a store when you need something are over thanks to three big game-changers: the green movement, the economy and the Internet. Motivated by Mother Nature and/or saving money, people have being using the Web to barter, trade and even give away items they don't want anymore. In fact, you don't even need an online connection to benefit from freebies. The popularity of community swaps is increasing as consumers look for more and more ways to pinch pennies. So this year, in lieu of a store-bought Halloween costume, which can cost upward of $100, pass last year's disguises on to younger siblings, or arrange for a swap among your children's friends, suggests Leslie Strebel, a financial adviser-and mom-in Ithaca, New York. A swap is also a great way to exchange children's dress clothing, since chances are, your daughter will only fit into that ruffled dress for one Christmas. If she doesn't have a younger sister, pass it on to a neighbor or collect clothes she's grown out of and trade them in for larger sizes on the popular swap site thredUP.com. And, keep in mind, trading clothing isn't just for the younger set-you can benefit from a swap, too! Check out 10 Tips for Hosting a Successful Clothing Swap for more information. Photo: Image Source/Getty Images
Bad Habit #4: Ignoring your credit score.
If you don't keep tabs on your credit score, you could be in for a rude awakening when you apply for a mortgage or try to take out a loan to pay for your kids' college tuition.
Savvy Solution: Log on to AnnualCreditReport.com for a free credit report. Many financial experts suggest checking your score annually; Davis suggests doing so twice a year. (Note: You only get one free report per credit bureau per year.) "Understanding your credit report will help you make better money management choices," says Davis. Review your report for errors and have them resolved as soon as possible. Take note of your debt-to-available-credit ratio; if you have $20,000 in credit, you should have no more than $10,000 in debt. Cancel cards you don't use, especially those that charge annual or monthly fees. Photo: iStock Images
Bad Habit #5:Not having basic financial knowledge.
What you don't know can hurt you.
Savvy Solution: Deana Arnett, a certified financial planner and senior planning consultant at Financial Planning Services in Manassas, Virginia, says many of her clients are afraid of their finances. If you don't know how to tackle your debt or invest your savings-and ignore either rather than take action-you could wind up costing yourself thousands upon thousands of dollars. Arnett suggests taking a basic finance course at a local community college, which should give you a solid financial foundation. Photo: Thinkstock
Bad Habit #6: "Hoarding" money in your savings account.
You're not maximizing your earnings if all your money's sitting in a savings account that earns 1 percent interest-or less!
Savvy Solution: Having enough cash to cover your living expenses is always important-even more so in this economy. But beyond that, you should be investing in order to maximize your earnings. "The masses are focused on short-term survival when they need to be thinking about long-term success," says Steve Siebold, author of How Rich People Think. Even the most conservative investments will pay more than a savings account over time. Just be prepared to weather the storm if the market dips, and don't invest all of your savings. If you're uncertain about how best to allocate your assets, speak with a certified financial planner. Photo: Thinkstock
Bad Habit #7: Carrying a balance on department store credit cards.
The cons outweigh the pros when you only make minimum payments.
Savvy Solution: It's easy to get enticed by a 20 percent instant discount when you're standing at the register, but you'll pay for that savings several times over if you carry a balance on a department store card; most have higher-than-average interest rates-some as high as 25 percent! Also, frequently opening credit card accounts can hurt your FICO credit rating, says Beverly Blair Harzog, a contributing editor at CardRatings.com. Make sure to pay off balances in full, or better yet, just say no! Photo: Thinkstock
Bad Habit #8: Not having a household budget.
You and your partner will be more likely to fight about money if you don't have clearly defined rules for saving and spending.
Savvy Solution: "Having a budget in place will help you plan better," says Cathi Brese Doebler, author of Ditch the Joneses, Discover Your Family. Sit down with your partner and come to an agreement about your spending goals, such as buying a home, and saving strategies, like discussing any purchase over $100. Photo: Thinkstock
Bad Habit #9: Making purchases based on convenience.
You'll spend two, three, even four times as much on common household items when you make a last-minute dash instead of planning ahead.
Savvy Solution: Don't buy household items like paper towels or toilet paper by the single roll; instead, buy in bulk at a discount club or stock up when there's a sale at your supermarket, urges certified financial planner Joel Ohman, founder of CreditCardChaser.com. Cleaning products, diapers and heat-and-eat foods, like canned soup, will also cost several times more at convenience stores. Keep tabs on your groceries and shop around to get the lowest possible prices. Photo: Thinkstock
Original article appeared on WomansDay.com.
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