What is irresponsible financial behavior?
The simple truth is that a financially irresponsible person lives exceeding his means. To change this, you must spend less than you earn!
Also, try to AVOID the following Irresponsible Financial Actions.
- Failing to pay balances in full. The fact that you’re unable to pay your balance entirely shows others you have already spent more than you earn. So make sure to pay the balance on your account in full.
- Making only minimum monthly payments. Credit cards are useful. You don’t need to carry cash and have a chance to gain reward points. However, using credit cards to make ends meet is a bad idea. If an emergency forces you to exceed credit card limits, cut spending until the balance is paid in full.
- Taking too many loans at once. Applying for multiple loans may damage more than just your credit score, since having too many loans can make monthly payments almost impossible.
- Forgetting to pay the bills on time. Plan your monthly budget and never forget to pay bills on time. Think twice before making large and unplanned purchases. Set up reminders for ongoing payments and use low account balance alerts.
- Consider only monthly installments. Many people end up with crippling debt because they only consider whether they can afford the monthly payment. Our experts suggest determining the total price of a loan, which includes the loan principal, interest, and fees. Even small monthly payments for a high APR long-term loan will lead to thousands of dollars in extra interest.
When you plan to take a loan, make sure you understand the clear difference between essential needs and luxury items. For instance, most of us have a mortgage, but a mortgage isn’t right for everyone. Monthly mortgage payments should be less than a third of your monthly take-home pay and if you are unable to follow this strategy, the best option is to rent.
Become financially responsible
Evaluate your current situation and, if you spend more than you earn, make changes! It’s never too late!
References and Sources
1. The Basics of Financial Responsibility. Retrieved from https://www.investopedia.com/articles/pf/09/financial-responsibility.asp
2. Responsible Financial Behavior. Retrieved from http://economicstexas.org/wp-content/uploads/2016/02/Responsible-Financial-Behavior.pdf
3. 7 Critical Do’s and Dont’s of Managing Your Finances. Retrieved from https://myfabfinance.com/7-critical-dos-and-donts-of-managing-your-finances/