Mistakes that can compromise your financial health
National Debt Relief is one of the leading debt relief organizations in the United States. It is ranked number one by Top Consumer Reviews for having the best debt relief programs for 2016. The company came out with an article in September 2016, about the financial health of the consumer. It encourages you to work towards creating a stable financial future while avoiding costly mistakes that can compromise your financial health.
The article started off by pointing out that when you take care of your financial health, you are creating a stable financial future. For example, if you get sick and weak, you can’t handle any physical challenges you may encounter, the same goes for your finances, you will not be able to take advantage of opportunities that come your way if you have poor financial health.
Working to create a stable financial future is not something you can do only once. You must keep working to make sure you are practicing the right financial habits and making the right financial decisions, while at the same time getting rid of bad financial habits so that you will avoid the mistakes that can compromise your financial health.
Here are the mistakes that can compromise your financial health
Failing to follow a budget plan.
One of the most common mistakes consumers make is that they fail to follow a budget plan. A budget is one the most important tools you can use to help you improve your finances. You should create a budget and commit to following it no matter what, because it will allow you to identify where your money goes, enabling you to find the areas of waste and unnecessary spending.
Delaying your retirement savings
Another mistake is delaying your retirement savings. It does not take much to save for retirement if you start early. Data from CNBC.com show that Millennials with only 5 percent deferred income, could still save $1 million by the time they retire at age 65. The longer you wait to start your retirement savings account, the higher the amount you need to contribute to reaching your retirement goal.
Forgetting about your emergency fund
The lack of an emergency fund is another one of the mistakes that can compromise your financial health. It exposes you to stress and more debt when you face financial challenges down the line. While, on the other hand, a reserve fund can help people face unexpected financial challenges in the future.
Borrowing a home loan that costs 30% of your income
The fourth mistake that can hurt your financial health is getting a mortgage loan that takes thirty percent or more of your income. It will make it difficult to meet your other obligations as well as compromising your other savings goals.
Paying the minimum of your credit card balance
Finally, paying the minimum of your credit balance is another mistake consumers make which hurts their finances without them knowing it. This practice keeps consumers in debt for a long time as well as cost them a lot of money in interests. The best thing consumers can do is pay the full amount every month or at the very least pay more than just the minimum amount.
According to National Debt Relief, your financial health is good if you have enough savings, you are on track with your financial goals, and you are in full control of your credit obligations. If you have enough extra cash to help you pay for extra expenses, that is also an indication of a good financial health.