5 Common Money Mistakes To Avoid In 2021

Let?s face it: many of the biggest lessons we learn in life will come from making mistakes. This is true whether we are talking about relationships, our careers and, of course, money.

Sometimes, those mistakes are small and caught early, allowing us the opportunity to try a better approach. Other times, though, these mistakes can go on for years, setting off a catastrophic chain of events that will affect you and your family for years to come.

Odds are that you will still make financial mistakes, no matter how diligent you stay or how much you learn. However, by learning some of the most common money mistakes and ways to avoid them, you may be able to save yourself some heartache (and greenbacks) along the way.

Newrez offers a unique combination of mortgage expertise, financial strength and product innovation capabilities for folks looking to buy a home or seeking to refinance current loans. As a leading nationwide mortgage lender, Newrez believes homeownership is more about people than financial transactions. That's why its seasoned home loan experts are committed to getting to know you on a personal level, understanding your situation and helping you to achieve your financial goals.

With that said, here are five common financial pitfalls and practical ways to avoid them.

1. Not Having A Safety Net

One of the biggest financial hurdles you may encounter is living from one paycheck to the next. This practice is all too common, but that doesn?t mean it won?t set you up for failure.

By managing your finances with little (or no) wiggle room, you eliminate any safety net you might be able to build. If an emergency expense were to arise, you may not be able to cover it without going into debt.

Additionally, a paycheck-to-paycheck lifestyle doesn?t offer many options for the future. If you?re already struggling with regular monthly expenses, it may be impossible to save for a home, buy a new car or pay for your child?s education down the line.

Build an emergency fund. Save three-six months worth of expenses. And find some wiggle room between your income and spending.

2. Ignoring Your Budget ? Or Simply Not Creating One

A past study by U.S. Bank found that 41 percent of American households use a budget. Of course, this means that the majority of households do not.

Your household budget doesn?t need to be complex or aggressive. It can also change over time as your lifestyle, income, expenses and needs shift. The most important thing is that you have a budget in place.

The second most important thing? Well, you have to actually follow said budget.

A budget does no good if you?re constantly breaking your own rules, though. Save first, cut out wasteful expenses, downsize (your home, car, etc.) if needed, and maintain established spending limits. By doing so, you?ll avoid unnecessary debt, work toward your future goals and build a secure safety net for your family.

3. Making Minimum Payments

Credit cards aren?t inherently evil. If you manage your accounts improperly, though, it might begin to feel like they are.

One of the worst things you can do with credit card accounts is to only pay the minimum due each month. Thanks to compound interest, this will turn your everyday purchases into astronomical expenses and dig you into a hole of debt that you may struggle to overcome.

Ideally, you should be paying your credit card balances in full each and every month. If this isn?t possible, you should either stop using credit cards for a while and buy with cash, or transfer your balance to a card with a zero percent interest offer.

4. Paying High Interest Rates

Much of your debt could be refinanced at a lower rate, saving you hundreds or thousands of dollars along the way. This is true of things like your auto loan, home mortgage and even student loans.

By refinancing, you can take control of both monthly payments and the interest charged.

5. Waiting To Save For The Future

For decades, you may feel ?too young? to be saving for retirement. Or perhaps money is too tight to think about allocating funds toward savings each month.

By not thinking about the future early on, though, you set a poor precedent. More importantly, you will miss out on the growth of your savings (via compound interest) ? which could mean a difference of tens or hundreds of thousands of dollars come retirement.

You may not be able to save as much as you?d like today, but make it a point to still save for retirement from Day One.

There is no shortage of money mistakes that you could encounter in your financial journey. By making yourself aware of the most common ones, however, you may be able to head them off from the get-go ? and spare yourself a headache in the process.

Learn More About Newrez Mortgage Financing And Refinancing Options

NewRez LLC, 1100 Virginia Drive, Suite 125, Fort Washington, PA 19034. Corp NMLS#: 3013 (www.nmlsconsumeraccess.org). Licensed by the AZ Department of Financial Institutions (license no. 919777). Licensed by the Department of Financial Protection & Innovation under the California Residential Mortgage Lending Act. Loans made or arranged pursuant to a California Financial Lenders Law license. GA - Georgia Residential Mortgage Licensee #22847. KS - Kansas Licensed Mortgage Company (license no. MC.0025382). MA-NewRez LLC is licensed in Massachusetts as a Mortgage Lender. Massachusetts Mortgage Lender License - License Number: ML-3013. NJ- Licensed by the N.J. Department of Banking and Insurance. NY- Licensed Mortgage Banker - NYS Department of Financial Services. RI - Rhode Island licensed lender. Additional licenses available at www.newrez.com. Call us at 800-208-0065.