• NO PROVISIONS FOR LARGE EXPENSES. We all have large, predictable obligations that come due at irregular intervals during the year. A large, forgotten insurance premium or tax bill can cause financial chaos if you’ve neglected to accumulate sufficient reserves.

Take all your big items and divide the total by 12. This 1/12th should be reserved every month against the time those bills will be due.

  • UNDERESTIMATING THE COST OF OWNERSHIP. The original cost is sometimes not the only cost of ownership. This is especially true of an automobile. Many of the costs are obvious but some get overlooked until we collide with them, head on. If a car is bought on an installment basis, monthly payments are just a small part of the cost of operating it. Figure on all the costs. Operating expenses are: gas and oil , repairs, maintenance, tires, insurance. Other costs include registration, license, parking, tolls, etc. In addition, a new car costing $11,000 depreciates in value by about $2,500 during the first year. While depreciation is not an out-of-pocket cost, it does become one when the car is traded on another one.
  • SPENDING LEAKS. Impulse buying–frittering away small amounts here and there on “little” things–can add up to a surprisingly big amount. Write down every cent you spend for a week and take a good hard look at your spending “leaks.” Then try to control these trouble spots.

Avoid shopping for groceries when you are hungry. You’ll buy more of those tempting goodies that can run up your bill.

Avoid “killing time” in department stores. (You’re sure to come away with something you hadn’t planned on buying.) Use an allowance and keep within it. Once you can resist the temptation of spending “small” amounts, you’ll have more money for the things you really want.

  • CARELESS SHOPPING HABITS. There are always pressures on us to buy things. Our wants are greater than our needs. And advertisers help exert this pressure. This leads to purchasing things we don’t really need and to buying without comparing values and prices.

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