Kerryn Boogaard Kerryn Boogaard
Beverly Goldsmith Beverly Goldsmith
Zoe Bingley-Pullin Zoe Bingley-Pullin

Budget Busters - 5 Financial Traps and How to Avoid Them:

Know how to properly allocate your money.
By Expert Tips
Date: April 13 2018
Editor Rating:
Motherpedia cover-5

Building a secure financial future takes patience, discipline, dedication and sometimes a little bit of sacrifice. However, the rewards are ultimately worth it to know that you can enjoy a comfortable, secure life. Unfortunately, along the way, there are many potential fiscal pitfalls into which individuals can fall. To preserve, consolidate and grow your wealth over time, be on the lookout for any of these five financial traps:

1. The Credit Trap

Whether you’ve found yourself in a financial emergency, or you’re in need of a quick cash injection before payday, it’s crucial that you don’t fall into one of the many credit traps. From payday loans through to hidden fees and high interest rates from banks and financial institutions, there’s always something or someone ready to grab your purse and shake it empty.

To avoid falling into the credit trap, consider low-interest small cash loans and microloans. These can often be safer alternatives to firms that offer a little bit of money with a whole lot of interest and inflexible repayment conditions.

2. Buying Something You Can’t Afford

We’ve all fallen in love with something we know we can’t afford. Then, before you know it, you’ve handed over the credit card and now own that expensive item. While the emotional connection is something money can’t buy, the fallout from purchasing something that’s not within your budget can be astronomical.

The average American’s credit card debt is over $6,000, and it’s only getting higher. If you aren’t able to pay off your balance within the month, high interest rates kick in, and you’ll find yourself barely paying off more than the interest.

3. Not Planning for Your Future

Getting old is inevitable, but if you want to be old and comfortable, then the time to start planning for your retirement is now. Too many people are putting off saving for their retirement because it’s “years away.” The truth is, we’re living longer than ever before. With an average life expectancy of 78.7 in the US, putting away a nest egg will ensure you can afford all life’s pleasures into your golden years.

4. You Aren’t in Control of your Money

If you only pay attention to your bank account is when it’s empty, you’re asking for trouble. Not being in control of your money is not a financial trap into which you want to fall. It’s crucial to know how much you’re earning, how much you’re spending, what bills you have, what luxuries you can afford, and what you are saving. Only a third of Americans have a financial plan, but it’s crucial to avoid leaving you short and in debt.

5. You Buy A House You Can’t Afford

House hunting must be a balance of financial sense and emotion. Sometimes the emotional pull of the American Dream kicks sound reason to the curb. When you’re entering the market for a new home, it’s critical that you aren’t pushing your finances to the limit. If you’re going to be living on rice for the next 30 years, with no guarantee that you will be able to cover any emergency payments such as car breakdowns or medical bills, it’s not a wise investment. Choose the house with your heart, but ensure it’s within your budget. If it’s not, walk away.

Money is 80 percent behavior, 20 percent reason, according to America’s money expert Dave Ramsey. It’s what you do, not what you know, that makes all the difference to your financial situation. Be smart with money and avoid financial traps that can set you back decades.

Share This Tweet This Email To Friend
Recent Comments
2 Total Comments
alisiajorge says: 2018 09 11

A personal loan and an unprotected mortgage or even unsecured credit is the same. Lots of people make use of the term personal bank loan as a description for a small mortgage which is repaid over a temporary time period this can be also what is called an online payday loan

CNP says: 2019 11 13

Financial emergencies can be anything, check below:
1. Medical emergencies
2. Increased education fees
3. Home improvement requirement
4. Surprise trip
5. Unplanned shopping expenses, and many more.
For such unplanned expenses, you can take help from short term loans (period varies from 7 days,15days or 30 days) provider companies. They provide loan from $100-$2000, can be more as per your requirement.

View All Comments
Post a Comment
* your email address will not appear

Please enter the word you see in the image below:

Post a Comment
* your email address will not appear

Please enter the word you see in the image below:33343

Your Comment has been posted
Related Articles
6 Simple Ways to Add Value to your Home Before…
Read more
Make sure you're on top of your financial life with…
Read more
Cry babies

Dry your eyes!
The newest additions are on their way from the Babies who cry real tears!


Latest Tech Used In Shipping Containers
Read how the shipping industry has revolutionised

Motherpedia cover-2

Win 1 set of a 4-book hardcover illustrated boxed set
Barbara Murray’s new 4-book Sound Stories is perfect for parents and educators and could assist with NAPLAN results

Motherpedia cover (4)

Where to celebrate Oktoberfest Australia
Get ready for this celebration!

Motherpedia cover-4

A Fortnight of Foodie Experiences at East Village
A taste of East Village. What's in it for me?

Globber my too fix up cover

We Try: Globber My TOO Fix Up
A scooter that grows with your child

Throw a winning cricket pitch

3 Steps to a Winning Backyard Cricket Pitch
Ex-Adelaide Oval legend curator Les Burdett shares his tips for getting your backyard cricket pitch test match ready this summer

A bike that follows your kids life cycle - motherpedia - cover

A Bike That Follows Your Kids Life Cycle
Check out the Bunzi 2-in-1 gradual balance bike!

Moonlight lifestyle

Moonlight Cinema to bring…
Moonlight Cinema announces brand new Western Sydney venue

Screen shot 2019-11-26 at 8.29.12 am

Your Magical Christmas Wonderland…
Adventure park is about to light up the night sky with its "Christmas Festival of Lights"

Screen shot 2019-11-21 at 11.11.36 am

The Preston Market Gets…
It's time to feel pumped up for the holiday season!


Bunnings team members get…
Help raise funds by buying a snag or donating at your local store.