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According to new reports, in New Zealand alone, 728,000 people owe nearly $15 billion. This is enough to frighten even the most astute saver into making more of an effort to protect their finances and get their spending in order. Interestingly though, mistakes here can often lead to people ending up in worse positions than when they started.

One example of this would be borrowing. After deciding that they need to get their finances in order, there are a number of people who will decide never to borrow again. They might cut up their credit cards and start paying for products or services only when they have the money in their account to do so. This is an error in judgement as many people need to borrow to take the pressure off their bills and the amount of money that they owe. Borrowing is somewhat ingrained in society and incredibly difficult to avoid completely, no matter how hard you may try. Let’s look at a few of the other mistakes people make when trying to get their finances back in check.

The most effective way for me to get my money in order has been being brutally and consistently honest with myself. Before I would avoid looking at my checking account balance, with the mentality that if I didn’t know, I could just keep on living and not worry about the ever-decreasing funds. After reaching near $0 (or below) a few too many times, I now get my balances sent to me daily, so I have to see them. I also get paper credit card statements each month, so I have a physical record of what I’m spending my money on. I don’t sign up for anything without doing a significant amount of research (and getting a second opinion), and I avoid pretty much all advice from money “personalities”.


Avoiding Little Luxuries

Every month we look forward to the little luxury products and services that we can purchase. This can be as small as buying chocolate in the weekly shop to something a large as investing in a new 4K TV. People who are keeping their budget in check often attempt to avoid luxury purchases completely. Instead, they only purchase what they need and nothing more. The problem? It’s a little like going cold turkey with junk food, sugar and sweets when you’re on a diet. Eventually, you are going to crack and buy everything you have desired for months. You can imagine the type of impact that this will have on your finances.

As well as this, buying luxuries can often be beneficial to your bank balance. For instance, purchasing a new TV could actually save you money on your electric bill.


Guessing Your Monthly Costs

When you are budgeting, it is important that you are aware of what you are spending each month. In the past, you might have needed to guess the amounts and estimate spending. But this is no longer necessary. With a banking app, you are only ever a few clicks away from finding out how much money is in your bank account, how much you have spent and how much you need to save. As such, there is no reason for the amount that you are spending to be a mystery, or indeed, an approximation. Keep a constant check, and you’ll always have the right number.


Thinking Your Monthly Bills Never Change

Lastly, you need to make sure that you take into account a little wiggle room for your monthly bills from energy to the weekly shop. These bills will not stay constant, and that’s why it’s smart to overestimate what you could be expected to pay. That way you will never be caught off guard, and you will always have the money you need to pay for everything in the month.

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