5 Life Decisions That Will Have a Serious Impact on Your Finances
The fact that anyone makes mistakes is a reality that we have to live with, however, the seriousness of those errors can sometimes change the course of our lives. This is especially true when it comes to the financial decisions that you make, mainly because most of these have permanent repercussions or are difficult to repair.
This having been said, while smaller mistakes such as being late with your bank payments can be repaired over time, even these can quickly add up and cause the banks to stop trusting you permanently, lowering your credit score.
Below you will find the 5 life decisions that may seriously harm your financial status.
- Cosigning a loan
One of the most damaging things that you can do when it comes to your financial records is cosigning a loan with a person that you do not fully trust. Keep in mind that when you cosign a loan you agree to vouch for a person who either does not qualify on their own (they may not have the required monthly income or any source of income at all), or they may have a bad credit score. Signing one of these documents places a lot of responsibility on your shoulders:
- If the one that you cosign is late with a monthly payment, it is your responsibility to pay it;
- In the case that the cosigner cannot finish repaying the loan, you will have to do it for him as if you borrowed the money;
- If anything happens, your credit score will also be affected, considering that you agreed to cosign the same agreement with the bank;
- Getting a criminal record
There are many disadvantages to having a criminal record, however, one of the biggest ones is the fact that banks will be less likely to trust you. This includes disqualification from employment and security clearances and, in some cases, you may even not be allowed to get financial aid for education.
The number and severity of restrictions that you will face depend on what is written on your criminal record. Banks and credit companies usually avoid doing any sort of business with individuals who have embezzled money or who have tried to cheat their lenders in any shape or form.
Keep in mind that even after your criminal record is no longer an issue, your financial records will remain marked, damaging your trustworthiness permanently.
- Ignoring the current instability of the economy
Hoping for the best is not always useful, especially when it comes to your financial life. Keep an eye on how the economy changes over time and learn to predict how it will affect your ability to repay your loans. If you make a habit out of borrowing money over and over again, ignoring the fact that you might lose your job before paying it back, you’re putting yourself on the chopping block, waiting to see if the ax will fall or not.
- Merging finances without marrying
Fewer and fewer people get married nowadays. Unfortunately, despite the fact that they do not legally merge their lives, they do their finances. This often creates a whole slew of problems, mainly when money-related disagreements appear, or when individuals break up.
The law can offer a large degree of financial protection to people who get a divorce, however, if you live together, merge your finances, but don’t get married, things will get messy. Particularly when it comes to splitting the common assets that you may have both paid for.
Attorneys can usually help you protect the property that you’ve paid for in a larger part, only if you are married and get a divorce.
- Pay a success task without having your money properly budgeted
Individuals that belong to some communities feel obligated to give something back when they find success in life. Unfortunately, this financial behavior can create a lot of problems, especially if you are at a point where you do not have your monthly expenses completely covered, along with your retirement fund, and an emergency budget.
The majority of people who feel obligated to pay a success task often end up going into the funds that they were saving up for other purposes, some important, just to avoid the feeling of guilt. Keep in mind that paying a success task is only useful to the community if you continue to be successful.
These are the main issues that people are having when it comes to their financial life. Learn to pay attention to how the economy changes over time and how it affects you. Furthermore, try to be conservative with how you spend your money.
Following the law and using it to protect your assets will always ensure that you have something to fall back on.