Friday the 13th is one of my favorite “holidays.” You never know when one will pop up, but it is typically a day of spooky movies and snacks around my house. However, if you’ve looked into the history of Friday the 13th, you know many people consider the day to be full of bad omens. I’ve learned over the years that some people do truly just have bad luck, but most of our misfortune can be avoided. Whatever you do, don’t do these three things with your money.
1. Overpaying for Housing
One of the biggest things you can do that will screw up your finances is overpaying for your housing. With rent prices like they are, it can be challenging to find something within your price range, but it’s not impossible. Here are a few things to consider.
- As a general rule of thumb, no more than 28% of your income should go towards rent or mortgage payments. Right now, that may seem hard to do. Nationwide, the average rent payment sits at $1,164 and with the housing crisis, it is hard to find anything to buy without a bidding war. Ignoring this budgeting rule can really hurt your finances though. When you overspend on housing, you wind up taking on debt to cover your other expenses. It’s a vicious circle (been there, done that).
- Consider relocating if you can. At the end of 2020, we made the decision to relocate to save money and be closer to our family/support system. This was a really great move for us. It’s not feasible for everyone, but if you can relocate somewhere that is cheaper to live, do it! The financial weight lifted off your shoulders is worth it.
- Look for roommates or live with extended family. Living with other people is another great way to reduce your housing costs, and more people are doing it than ever before. A lot of my friends live with extended family (parents, grandparents, aunts and uncles). They have a larger home, but everyone lives under the same roof. It reduces the overall cost of housing for each individual and helps with things like childcare, transportation, and other expenses too. Roommates can be great too, just make sure you know who you are moving in with.
2. Neglecting to Budget
Neglecting to budget will also cause you bad luck with your finances in the long run. As mentioned above, only 28% of your income should go towards housing. There are recommended budget percentages for just about every budget item you can think of. Don’t forget to include these things in your budget.
- Some fun money! You have to have a line in your budget for fun or entertainment. If you don’t, you are less likely to stick to your budget as a whole.
- Sinking funds! Sinking funds are another important budget line item. You need to have sinking funds for things like car repairs/maintenance, property taxes, vacation, etc. Make sure you have this in your budget!
3. Not Buying Insurance
Insurance is another biggie when it comes to protecting your money. While a lot of people will tell you insurance is a racket (it is), it is totally necessary unless you have some crazy amount of money. Even then, you’d probably want to insure it. When it comes to people without bucket loads of cash, you should hold a few different kinds of insurance, including:
- Health insurance
- Renter’s or home insurance
- Flood or other weather-related insurance for your area, if not covered in home insurance
- Car insurance
- Life insurance
These four types of insurance will protect you in the event you are in any kind of accident, your health declines, or something happens to your property (assets). It also helps protect your family and provides them with a way to take care of things if you can’t. Without it, you can quickly eat up your emergency fund and then some. You’ll find yourself pulling out a loan or using your credit card to cover the costs.
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