There are many money moves that you will make in your lifetime. Some of them will surely make you a financial success. But there are also those that will make you a financial failure.
The challenge is not in making the financial move but in choosing which of your options will lead you down the path that you wish to go. Every situation is different and there are so many considerations when you are trying to make a move that concerns your finances. You need to be fully aware of your current financial position and where you intend to go. These are only some of the things that you need to know before you can make the right decision about your finances. Sometimes, all it takes is one wrong move for you to have all your finances crumble to dust.
7 shady financial moves that could turn out to be beneficial
The tricky part about these money moves is that there are options that may seem like a bad idea, but given the right circumstances, may be the best choice for you. Here are 7 seemingly shady financial moves that are not always deemed beneficial but an actually work well for you.
- Renting instead of buying. In most cases, people will tell you that buying is always the better choice. Even if you do not have the money to buy a home, you can always borrow a home loan so you can afford it. What you pay towards your rental can be allotted for towards your monthly mortgage payments. However, according to an article published on USNews.com, it is very important that you crunch the numbers first. It may seem like you are saving when you buy a home but you have to know that there are a lot of extra payments when you are a homeowner. You have the property tax and insurances. You need to be aware of these because it might just be that you are better off renting for a couple of years before you take the homebuying plunge.
- Choosing the longer payment term for your home loan. Most people buy a home through a mortgage. There are many options to choose from and in terms of the payment period, the most common is 15 years or 30 years. Now if you want to get out of debt faster and pay a lower interest amount in the process, the best option is to choose the 15-year mortgage. However, there are cases when the 30-year mortgage is more practical. It may be true that you will be paying more in interest but you will also have a lower monthly payment. That lower amount may just lower your chances of defaulting on your mortgage payments.
- Making credit card purchases. Some people have sworn off using credit cards to make a purchase. However, this is one of the money moves that you have to keep on doing regardless if it puts you in danger of credit card debt. Using credit for purchases can help you maintain a good credit score – but only if you master credit management. You see, it is not the card itself that puts you in debt. It is your own spending behavior in relation to your credit card ownership. Learn how to practice the right credit card use and you do not have to be threatened by this purchasing tool.
- Opting to buy a used car. A car is one of the “necessary” expenses that start to depreciate as soon as you drive out of the dealer’s shop. That is why some people want to discourage those who buy used cars because they may be saving on the actual purchase, but they might have some problems with the maintenance of the vehicle. But if you know enough about cars or you have a trusted friend who is a mechanic, you can get a great deal out of used cars. And if you drive carefully, you can prolong the life of your car even further and save more in the process.
- Trusting your kids with money. This is actually an advice that a lot of financial experts are beginning to promote nowadays. But some parents think that kids may not be ready to handle their own money. Well here’s the thing: you need to let them fail. It may find it dangerous but you have to consider the fact that it is through mistakes that your children will learn how to manage their money. Let them commit mistakes but be there to guide them on how to get out of it. This is tough love but it will help your kids be more mature.
- Letting family and friends borrow from you. This is actually a big no-no for some people. According to About.com, this is more than just a simple business transaction. You are not only putting your money on the line – you are also putting your relationship on the line. But there are instances when this is just the right thing to do. You are family after all. Just make sure that if you will let them borrow money, it is an amount that you are prepared to lose. If it cannot be helped and your loved one requires a big amount, you have to make things official by drawing up a document. It will protect the both of you.
- Spending on your happiness. When your budget is tight, you are usually prompted to remove all your entertainment expenses. This is not advisable. While you have to keep it in moderation, you deserve a treat every now and then. Besides, there are ways to have fun with a frugal lifestyle. You do not have to completely eliminate it from your life.
Tips to ensure all your money decisions will lead to success
While you may be practicing a lot of good money moves, you need to realize that there are certain habits that will reinforce all your decisions to make you a financial success. Here are some of the tips that you can implement in your life.
- Live below your means. In the past, experts tell us that we have to live within our means. That is no longer the case. We have to focus on living below our means because that is what will help us increase our personal wealth. When we live below our means, we guarantee extra money each month that can be used to invest.
- Create a budget plan. This is very important when you want to take control of your money. You cannot control something that you do not understand. That being said, you may want to use a budget so you can identify your income and the expenses that it is financing.
- Keep your debts to a minimum. It is also important that you limit your debt amount. Borrow only when necessary and make sure that you can pay it back. If not, then you need to abstain from making that loan or borrowing money.
- Invest in your future. When we say future, we are referring to your retirement. Contribute as much as you can and as early as possible. That is how you can secure your financial future. You can also start investing in other financial baskets so your extra money can start working for you.
- Build up your emergency fund. This is one of the most effective ways to stay out of debt. In some cases, accumulated debt is not caused by overspending, but by your inability to pay for unexpected expenses. When it is an emergency, you are forced to borrow money to get yourself out of a tight spot. Keep this from happening by having your emergency fund intact and sufficient for any situation.