All of us make money mistakes at one point or another. It’s okay to make these mistakes to learn from them. Recognizing these mistakes is the first step towards making better financial decisions. This post is going to describe the top 10 common money mistakes you have to stop making in order to become more financially successful.
For more tips for finance, budgeting, saving, and all things money, be sure to view the Finance page.
Common Money Mistakes:
1. Over Subscribing
Do you have cable, Hulu, Disney +, Netflix, Sling, HBO, or a combination of multiple? Why? One of the most common ways people misuse their money and make mistakes is through over subscribing. Something many of us fall victim to is signing up for that 30 day free trial while getting lazy about canceling it!
Always keep track of your subscriptions and decide where you can cut down. If you aren’t using one of your streaming services as much as another, that’s a telltale sign to stop paying for it.
Once a month or more, you should be checking your transaction history and cancelling any subscriptions that aren’t necessary.
I’ve totally been in that boat where I was charged 3 months for a subscription I didn’t even know I accidentally signed up for. That’s irresponsible financially on my part.
2. Buying a New Car
Do you have an old, used and abused beater that gets you safely and reliably from point A to point B? Then it’s perfect!
Buying a new car is not a good financial decision in the slightest because as soon as you drive off the lot with that brand new 2020/2021 beauty she will depreciate in value immediately.
What happens if your car does break down and it’s necessary to purchase a new one? Sure, these big purchases have to happen at one point or another and that’s why we save for them.
Instead of getting this years latest model, look for something a few years used or something coming off a lease. Since cars depreciate, you shouldn’t be looking to spend the full retail value but rather the discounted price after the car has already been used.
By buying used, your down payment, as well as monthly payments, are already going to be minimized.
3. Excessive Spending
We are all guilty of this money mistake! With credit cards and Apple wallets, you’re never without access to your bank account or money.
This makes it so easy to buy that small trinket that you don’t need but have your eyes on. Not saying that you should leave your credit cards at home, but be honest with yourself when you go to purchase something you don’t necessarily need.
One way to curb this excessive spending is through cash budgeting. Being able to see exactly how much you have to spend and how much you have already spent allows for better visualization.
Allocate envelopes of cash towards certain types of spending. Make an envelope for gas, one for groceries, and one for fun spending. This will help you see how much you have an allowance of for spending.
4. Not Investing
If you haven’t started investing yet, it’s time to start! Not investing is a huge money mistake that too many people are not taking advantage of. If your employer offers a 401k, start contributing.
If you don’t have a retirement fund set up yet, open a Roth IRA account and start making your own contributions.
When you invest into the market you are ensuring that your capital will inflate with the rest of the market. If I decide to invest $10,000 into a mutual fund, then in 10 years I will have $20,000.
There is no reason not to invest, no matter how small of an investment you can make! You have to realize that safe investing is a long term process, so be patient with it and thank yourself later when it pays out.
5. Not Saving For Retirement
This is a huge money mistake that is so common. A lot of younger people push off saving for retirement thinking they have plenty of time to start later. The time to start saving for retirement is now.
Like was said before, no matter how small of a contribution you can make towards retirement, do it.
The earlier you start saving for retirement, the more time you’re allowing for your retirement investment to grow. It really is as easy as saving and putting your money into an investment account. Let time and compound interest work its magic and make your wealth grow.
6. Overusing Your Credit Cards
Using a credit card is a great way to build credit and earn cash back on rewards. However, if you’re using your credit card for every single purchase, you might want to reconsider.
When you overuse your credit card, you’re allowing yourself to creep into dangerous territory. You should only spend what you have in your bank account and nothing more.
This is something we all make mistakes with. It is so easy to go over your budget by using credit cards for expenses you wouldn’t normally have. Avoid this by sticking strictly to your budget.
Label your credit cards for the types of spending they should be used for. Only bring your debit card to the grocery store if you need to.
7. Quitting Your Job Before Getting a New One
If you’re in a position where you feel like you want to or need to quit your job, be sure you have another job lined up. Start searching for jobs as soon as you feel like you need to quit. When you quit a job, you don’t qualify for unemployment. This can put you into serious financial strain really fast.
Getting a new job unemployed is also more difficult than getting a new job while employed. Employers want to see that you’re working and that you want to keep working. If you’re unemployed looking for work, employers might question why there’s a gap.
8. Not Budgeting
Making a budget is such a simple task to complete. Too many of us make the mistake of not creating a budget. You don’t have to sit down and meticulously plan all your spending down to the penny, but you should create a general plan so you know how much you spend vs. save.
For budgeting, I use Mint. This app is great to see your income cash flow, how much you have saved and how much you spend. I love being able to see the differences in savings each month. It helps you to see when you’re spending too much and saving too little. Mint also allows you to create budgets, and savings goals.
9. Living Beyond Your Means
One thing that happens frequently, is when people try to live beyond their means. Maybe that designer bag is calling your name, that apartment that’s slightly outside your rent budget has SUCH good lighting, or you have to have those new Chanel Espadrilles.
No! It is so common for people to want that bigger and better thing, even when they can’t really afford it.
Live conservatively, and efficiently. Spend what you have and save even more. You don’t have to have the biggest, best item to show off. If you want to know how to spice up your apartment or wardrobe for reasonable prices, then check out the Design and Style pages.
10. Putting Off Paying Debt
One of the most common money mistakes that’s made is not paying off debt right away. When you have debt, the banks are just collecting extra interest that you have to pay on top of your debt! The easiest way to tackle your debt is to use the snowball method.
It’s time to stop putting off paying it, and start with the smallest amount first. Once you can pay off the smallest piece, you will see that you can work your payments into your budget. This habitual change will show you that it’s possible to tackle that seemingly impossible sum of money.