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Avoid these 5 financial mistakes ahead of the new year

A financial plan provides your life direction, helps you make wise financial choices, and gives it purpose.

  • DNA Web Team
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  • Nov 19, 2022, 02:22 PM IST

A financial plan provides your life direction, helps you make wise financial choices, and gives it purpose. Calculating the amount of money you will need to earn, save, spend, and invest in order to achieve your life goals is part of the financial planning process. Create your financial goals now since the new year is the time for resolutions. Without financial preparedness, a new year's resolution is frequently unfinished since doing so can end up being expensive in the long term.

1. Investing without a specific goal

Investing without a specific goal
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It's typical for people to invest without a clear goal in mind and to make investments just for tax benefits or to maximise returns. When making an investment, one must consider its intended use.

2. Long-term non-monitoring of the credit report

Long-term non-monitoring of the credit report
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Many people, even those who are aware, wait until they are applying for a loan or credit card before checking their credit score. Since it displays what factors have increased or decreased your credit score over the past year, you should check your credit report frequently.

3. Using too many credit cards

Using too many credit cards
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Repaying a line of credit with too many credit cards is not a good idea. If you apply for many credit cards in a short period of time, managing multiple cards can be challenging, can result in overspending, and can lower your credit score.

4. Failing to make credit card and EMI payments on time

Failing to make credit card and EMI payments on time
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Your credit score will suffer if you fail to make payments by the due date. Your creditworthiness may be impacted, making it more challenging for you to borrow money in the future. Decide to maintain your payment discipline in 2023. 

5. Emergency funds are crucial yet misused

Emergency funds are crucial yet misused
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It is more important than ever to have an emergency fund. Having additional money taken out of your paycheck on top of all your debt may be painful. An emergency fund can be a lifesaver in situations like these when worries about economic instability and job losses are on the rise.

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