Correcting a mistake isn’t always simple, especially when it comes to your finances. You may know there’s something wrong with the way you’re spending your money, but the solution sometimes is not so obvious. If you’re scratching your head over your budget, you could be making two of these simple mistakes. Keep reading to learn how you can solve them, quickly and easily.
Living without a cushion
No, this mistake isn’t related to the couch cushion you sit on each night as you binge-watch the latest Netflix original. Though the butt groove you’ve created is comfortable, it doesn’t affect your finances one way or the other. Living without acushion usually means:
- You live paycheck to paycheck. Spending as much as you bring in each month (or more thanks to credit cards) means you have no cushion between your income and your expenses. You break even after you’ve paid for everything — or you go into debt a little bit more each month —despite bringing home regular paychecks.
- You have no safety net.A safety net is your savings. Whether you call it a nest egg or an emergency fund, it’s a necessary feature of your finances if you expect to survive financially trying times.Experts say a robust safety net has anywhere between six and twelve months’ worth of wages sitting in it.They recommend such a large amount in case you face an extreme financial crisis, like a sudden loss of job or medical emergency.
Having no contingency plan
Living without a cushion often leads to living without a contingency plan. If you live paycheck to paycheck or you prioritize other expenses over your safety net, you won’t have the luxury of a cushion to protect you when emergencies happen. You need to correct this by living within your means. If you aren’t sure what that means, you should:
- Check in with budget guides and money management apps to help you track expenses
- Distinguish your needs and wants, then eliminate unnecessary spending on frivolous things
- Consider your career and how you can boost your income with a new job, a raise, or a side hustle
- Target debt if these bills cut into what you can save
Use these techniques to start building your savings from scratch. In the meantime, have a backup plan in case you encounter an emergency before you have a robust safety net. Online installment loans are perfect for urgent, short-term issues that happen while you’re creating your emergency fund — like when you have to replace a broken furnace or take your cat to the vet. These bills often require immediate repayment, and only direct lenders like MoneyKey offer fast installment loans online that work within that timeframe. In some cases, you can receive your cash loan in as little as one business day after you’re approved, making them ideal for unexpected bills you can’t delay.
Nobody’s perfect. Everyone slips up from time to time, so don’t be too hard on yourself when you inevitably get it wrong. Though you may not be able to stop yourself from flubbing, what’s important is how you go about fixing your mistakes. Remember these tips and refer back to them whenever you feel like you aren’t making the most out of your finances.
