"Common Mistakes Made with Money and How to Avoid Them"

Everybody makes mistakes with their money at some point in their lives. Unfortunately some will make money all their lives. The important thing is to understand the mistakes we make and how to remedy the problem. Here is the list of the top most common mistakes people make with their money, and what you can do to avoid these mistakes.

1.  Buying items you don't need...and paying extra for them in interest when using credit cards. Every time you have an "impulse buying" and you use your credit card but you don't pay in full by the due date, you could be paying interest on that item for months or years. Spending money for something you really don't need is not in your interest and could end up being a catastrophe in some cases.

Research purchases and comparison shop before you buy. Ask yourself if you really need the item you intend to purchase. Buying a big screen TV or the latest electronic items may not be such a fantastic ideas. You don't really need a big screen TV. This is a luxury item and you can live without it. Always think things over rather than making a quick and costly decision you may come to regret. The only good reasons to pay for major purchases with a credit card, is that if you have problem with the item you can return it. If you are not happy with the item and that the merchant does not want you to return it you can dispute the charge.

Using a credit card can be an excellent protection against rip offs. But if you charge an item using a credit card instead of paying  cash, be smart about how you repay. You can take advantage of offers such as (example: "0 % interest until September 2010") but understand that if you do not pay the entire balance by the due date (September 2010 in this example) you could be paying interest retroactively and could be hit by a serious charge with interests du from the date of the purchase. That interest charge could be as high as hundreds or thousands of dollars. So you must pay the entire balance on your credit card or as much as you can to avoid high interest charges, which can add up significantly over the years.

2.  Learn to manage your money wisely. Recognize the warning signs of a huge debt problem. These may include borrowing money to make payments on loans you already have, using credit cards to pay for other credit card payments and paying bills late.  If you believe you are experiencing debt overload, take appropriate measures. You should try to pay off your highest interest-rate credit cards first and before the due date as you are paying daily interests. If your debt is out of control you should be using a "Monthly Budget Sheet" to correct your problem and assess your financial situation. If you do not know how much money you spend versus how much you make you will never be able to correct your spending problem. There are also reliable credit counselors you can turn to for help at little or no cost.

3.  Don't be late on your bills. Credit bureaus prepare credit reports for use by employers, credit card companies, lenders insurance companies, landlords and others who need to know someone's financial reliability, based largely on each person's track record paying bills and debts. While 1 or 2 late payments on your loans or bills may not seriously damage your credit record, making too many late payments will show creditors a bad habits. Credit card companies could charge you higher interest rates on your credit cards as part of the agreement. If you apply for a loan or credit cards you will not qualify for the best interest rates thus you may pay thousands of dollars in additional interests. So, pay your monthly bills on time.

4.  Having too many credit cards. The more credit cards you carry, the more inclined you may be to use them for impulse buying. It's very easy to be tempted to use credit cards when you have them. You should put them in a drawer and only use them in case of an emergency. Credit cards are too easy to use. If you cannot afford an item you should consider doing extra work or finding a new part-time job. Once credit card bills accumulate it takes a very long time to pay them off.

5.  Not tracking your expenses. It's very easy to overspend with all advertising we see on TV, newspaper, radio etc... You must track all your spending using a monthly budget sheet. A budget doesn't have to be complicated, intimidating or painful just something that works for you in tracking all your monthly spending. You can find monthly budget sheet on the Internet for free.

6.  Not saving money for your future. You need to get into the habits of saving money for future important purchase such as a home, or for your retirement. You need to start saving as early as possible. You will be amazed at how much money you can accumulate in investment over decades of savings. You can start by putting $100 into an IRA or Roth IRA. You can arrange with your bank or employer to automatically transfer a certain amount each month to a savings account or to purchase an investment, such as a mutual fund that buys stocks and bonds. The important thing is to start saving as early as you can for your retirement so you can benefit from the effect of compound interest.

7.  Not taking responsibility for your finances. Be sure to review your bills and bank statements periodically online or by telephone. You want to make sure there are no errors, unauthorized charges or indications that a thief is using your identity to commit fraud. It is not unusual to see companies charging you for no reason. You may have cancelled a service but the company keep charging you. You may have done business in the past with a company which decides to charge you month after for no reason. Sometime a company could be increasing its fee. Keep copies of any contracts or other documents that describe your bank accounts, so you can refer to them in a dispute.