Proper management of your personal finances is necessary so that you can live the life you want and ensure a secure hereafter. One wrong money move could put your financial health in danger, so it's important to make a point you're taking the far steps when information technology comes to minding your money. Here are some money mistakes you must avoid the least bit costs.

1. Carrying a charge plate balance from month to month

pile of credit cards
credit cards | Source: iStock

Carrying a balance from month to calendar month bequeath go on you in debt indefinitely. Position yourself out of your unit of time misery, and pay down your debt once and for all. Certified Business Planner Mathew Dahlberg, break of riches management firm Main Street Investments, said information technology's best to kiss that debt upstanding-adieu A soon as potential. "One slip up I oft see is a client carrying a equilibrize happening a credit card each month on which they are not acquiring a promotional rate," he said. "E.g., the client may have a small amount on their add-in and be given the balance up and down over the course of several years. The problem, of course, is that this type of 'bad debt' has such a high cost."
Dahlberg continued to illustrate his channelize:

E.g., if a individual carries an average balance of $1,000 happening a typical credit card for one year, they could be gainful between $200 and $300 of annual interest costs. Patc this may non constitute a large sum to the typical consumer, this is one category of commercial enterprise leakage that can drag down a person's ability to save, peculiarly o'er the long term. I advise our clients to commend that when they find out the Good Book 'debt' they should immediately think 'dependence' and 'risk.' Piece debt can of course constitute a valuable tool, information technology can ADHD peril to a transaction, while at the same time limiting a person's choices.

2. Ignoring slim bills

woman with money on mouth
womanhood with money | Source: iStock

Just because a bill is not large doesn't imply you should ignore it. You could stock-still get conveyed to collections. Personal finance practiced Sonya Smith-Valentine, founder of Financially Fierce, said it's probative to follow responsible with your bill payments, disregardless how small. "Peerless of my overstep money mistakes that people should deflect is failing to pay a small notice (for deterrent example, a $20 missed designation fee charged by a doctor's office). The diminished bill will morph into a mountain of problems," she said.
Here's how Smith-Valentine aforesaid that small bill becomes a big problem over time:

Small bills normally get transmitted off to collection agencies beautiful quickly. The accumulation agency adds in collection fees thusly that the bill becomes big. The collection way past reports the collection account to your credit describe. Your credit score then drops 50 points or more. Even if you fund the collection account off, the collection remains on your citation composition. The account is just updated to demo paid (but non removed from your credit report). Your credit score does not jump congest 50 points because you paid the calculate off. Your ability to get revolutionary credit is affected as you testament have got to pay higher interest rates (referable a lower credit score). So the $20 bung has now cost you 50 points on your credit tally and thousands many in interest.

3. Not saving for emergencies

man putting money into piggy bank
Saving money | Source: iStock

It's non a matter of if, but when an parking brake will arise. Don't leave things up to chance. Jaycob Arbogast, financial contriver and founder of Arbogast Advisers, said it's important to set out saving for a showery day straight off. "Near two-year-old people just keep track of their bank account poise, but wear't have an actual savings project or budget in blank space. The old adage of 'pay up yourself first' is a great technique to help get your savings nether command," Arbogast aforementioned. "Apiece clock time you get a paycheck, hire a big part of it and put it in savings. Then leave it there and don't take information technology back proscribed. If you waitress until the conclusion of the month to economise some you have left-handed in your bank account, you'll probably consume fagged it all and wealthy person nothing to save."

4. Flunk to pay bills connected time

stack of late bills
overdue bills | Germ: iStock

Your payment story accounts for 35% of your FICO credit score. Frequent late payments will damage you. Amy Trio, regional V.P. of Wintrust Mortgage, advises staying on pass of bills and making sure to pay them in full and on time, every time. "Ironically people with plenty of hard cash flow can be sloppy about paying their bills. Organism 30 days late on a charge plate can make a momentous difference in a credit seduce," said Tierce.

5. Ignoring an Internal Revenue Service Find

Internal revenue service sign
IRS | Win McNamee/Getty Images

Wear't ignore the IRS. They bequeath find you and make you pay what you owe. "You may file all return without error and have no legitimate reason to worry about hearing from the IRS. However, it's important to think of that a percentage of taxpayers are chosen for scrutinize purely at hit-or-miss," said Nicole Erwin, an low-level licensed tax professional for Task Defense Network, LLC. "Whether you receive acknowledge of examination or a letter regarding a taxation bill you overlooked, father't make the misidentify of disregarding it," she said. "Whatever IRS notice requires a prompt response and may entail some type of legal action on your portion, such as providing information or payment. You give the axe ultimately resolve any IRS concern, but you must address it. Unsuccessful person to do so wish only provoke further, more aggressive IRS letters and action."
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