Buying a home is a dream for millions of Americans, and it is within reach for many. Still, it can sometimes feel like an uphill battle to save for a down payment and make your homeownership dreams a reality. If you want to avoid common roadblocks to success, the experts say you should ensure you’re not making any of the following three mistakes:
A “Monthly Budget” Mindset
You’re probably thinking that having a monthly budget is a smart personal finance move – and it is! Establishing a budget is a proactive way to manage your finances more efficiently and accomplish your money goals. However, recent studies show that creating an annual budget, rather than a monthly one, leads to more conservative spending among consumers. This is because most of us tend to play it safe when budgeting annually, never knowing what expenses or financial changes the future may hold.
Falling into the Credit Card Rewards Trap
The majority of Americans own credit cards, and many are taking advantage of rewards programs, such as those that let you earn cash back on purchases or rack up free travel miles. They seem like a great deal, right? Well, the truth is cashing in on these incentives can do more harm than good. Rewards-based credit cards encourage a phenomenon called “purchase acceleration,” which causes consumers to buy things they simply don’t need in order to further their rewards, continuing a dangerous cycle of debt.
Overspending on Gifts
Were you among the majority of Americans who spent almost $900 on holiday gifts last in 2019? Each year, many consumers find themselves overpaying for presents, especially when waiting until the last minute. Planning ahead – and setting a budget – ensures you won’t take on more debt or borrow from your savings when the holidays roll around.
If you’re working toward the goal of buying a home, make sure you avoid these three personal finance mistakes. Doing so will ensure you accomplish your goal of homeownership more quickly and maintain better financial health in the process.
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