Why Financial Ignorance Can Hurt You?

The very well known phrase “Ignorance is Bliss” cannot be applied to financial matters. It is quite the contrary because the more you know the better you will be off managing everything that is related to your money.

First of all you need to keep a clear track of all of your expenses; some people recommend making use of a chart or a detailed sheet that lays out all of your expenses and the description. This will give you a better idea of where your money is headed to and how much income are you receiving. This will lay out in detail if you have money coming in from an investment plan, a building you rent, or your full-time job.

Now imagine you were not aware of how much difference there was between your expenses and your income; you might end up spending a lot more than what you are supposed to and this would most likely lead to high credit card debts. It might be a bit wearisome to try to lay down that regards your finances but remember it is your money and you ought to manage it the best that you can.  

Many people ignore the fact that their banks many times charge them fees that they don’t know even exist. People are usually busy and a lot of them do not check their bank statements and letters thoroughly. Keep in mind that there are banks that offer free checking and savings account; if there is something that you are not sure about always ask a bank teller or customer representative because as their customer you have the right to know everything that is related to the handling of your money.

Make sure you are aware of all the fees that are related to your credit card. Some of them might sell you the idea that they will provide you with rewards or points but have you checked if there are any annual fees for your card? Some cards might be charging about $300 a year just for you to PAY THEM money, doesn’t sound fair, does it? Do your research and find an alternative because there are enough cards out there with no annual fees.

Another thing to keep in mind is inflation. The term might sound a bit strange but inflation simply refers to the increase in prices meaning that what you can buy today with $100 you most likely won’t be able to buy the same in 5 years. You need to keep in mind when you make an investment or when you decide to open a savings account. For example if the account is paying you 1% of interest but the inflation is up to 3% then you really aren’t making any money. When planning for the future, don’t forget to take the inflation rates into consideration because it will give you a better idea of what to expect and how to proceed.

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