Decisions that can Negatively Impact your Financial Future

There are many decisions that can negatively impact your financial future – both big and small.  Some of these are obvious and well-known, while others may be a surprise.   In general, saving money on a regular basis, watching your spending, and trying not to borrow money when not necessary can all help you have a positive financial future.  Regular saving is a good place to begin – even children can open a savings account and regularly put money aside for their future.

One of the most obvious decisions that can negatively impact your financial future is quitting or changing your job.  While a change of job can be a positive decision, many people jump to the decision too quickly without a proper backup plan.  Even if you are frustrated with your job, don’t quit unless you have something else lined up.  It can be hard to stick with a job that you don’t like, but always make sure that you have another option that will allow you to keep up your current standard of living before leaving your job.  In addition, make sure you begin saving for retirement as soon as you start working.

Going into debt will obviously impact your financial future, but whether or not this effect is positive or negative depends on many different factors.  “Good debt,” such as student loans and mortgages is usually considered to have a much more positive effect on your financial future than “bad debt,” such as credit card debt.  Of course, it is always better to have no debt if possible, but this may not be feasible for many people.

Student loans, although considered “good debt,” can be reduced in many different ways, reducing the burden of debt in your future.  To avoid student loans negatively impacting your financial future, minimize them by applying for as many scholarships and grants as possible.  Other ways that you can reduce the amount of student loans needed are to work during the school year and the summer.  Community college is much cheaper than four-year colleges, so attending a community college for two years before transferring may significantly reduce your financial burdens in the future.

Mortgages are another form of debt that is usually not seen as harmful, but they can actually negatively impact your financial future if you are not careful.  It may be a good idea to work with a financial advisor as well as a real estate agent to determine what you can actually afford to pay per month.  Many people take out a bigger mortgage than they can afford and either end up in foreclosure or have to make extremely drastic changes to their lifestyle to meet their obligation each month.  It is vital to make sure that you can afford your mortgage or the asset can quickly turn into a liability and have a negative effect on your financial future.

Finally, credit card debt can negatively impact your financial future for a long time.  Credit cards are great for emergencies but otherwise should be paid off each month in full if at all possible.  If you only pay the minimum payment, you will end up paying many times the original purchase price.  Interest rates for credit cards can be very high and keep you in financial bondage for a long time.  If at all possible, try to pay all credit card bills in full each month to avoid any negative impact on your financial future.