Making responsible financial decisions is an ongoing process to achieve financial freedom. Unfortunately, while it requires a lot of small, wise decisions to grow your wealth, it’ll only take a couple of mistakes to destroy your efforts. Here we’ll take a look at six of the most common financial mistakes that often lead people to extreme economic hardship.

1. Buying A New Car

Having the ability to afford the repayment isn’t the same as being able to afford the vehicle. By applying for credit to purchase a car, the buyer pays interest on a depreciating asset, which increases the difference between the valuation on the car and the price you paid. Even worse, many individuals trade in their cars every a couple of years and lose money on every deal.

2. Repaying The Minimum Payment On Your Credit Card

If you accumulate an enormous amount of credit card debt, it can be tempting to pay only the minimum payment. However, your actual balance still exists, even though you only pay a small part of it. In addition to that, your balance will collect interest, which suggests you’ll owe even more the following month. If this routine repeats itself, before long your credit card debt will start to grow out of control.

3. Not Building Up An Emergency Fund

An emergency savings fund is a savings account for emergency situations that cost money, like losing your job, car problems, medical bills and veterinary bills. Determine what you can live without and start saving those funds in a particular account. It won’t feel like a lot at first, but the important factor is that you start saving. Eventually, you’ll build up a fund that can give you support during unexpected situations.

4. Not Saving For Retirement Early Enough

When you’re nearing retirement, you won’t have the ability to turn back time. Start saving immediately to ensure you don’t have regrets later on.

5. Investing In A HomeTthat Is Too Pricey

You’ll pay a greater portion of your income than you need to towards your housing, which can make it hard to save or make investments for retirement. A more expensive home also comes with increased property taxes and insurance fees. If your property costs more because it’s bigger, you’ll spend more money on furniture, utility bills, and routine maintenance. Higher mortgage repayments are also more challenging if you lose your job or experience a drop in income.

6. Late Payments On Your Debts

Should you go into debt, paying on time is crucial. A bad credit score will get you rejected for loans, which could prevent you from purchasing a home and building equity. It could also mean you’ll be paying thousands of dollars more on interest for a home loan, car loan, along with other personal debt.

To avoid late payments, contact Zebra loans for a payday cash advance.