We’ve all struggled with money. Even if you haven’t, you’ve probably made a decision or two in which you were throwing your money away. It’s always a good idea to evaluate and analyze your cash flow every now and then to make sure you’re getting the most bang for each buck. Here are some money mistakes that we all make and that we should stop making right now!
Not Having a Budget. If you don’t have a budget, create one. Without a budget, you won’t know what you’re spending your money on, and knowledge is power when it comes to finances. Look at your monthly income, and make categories that fit all your wants and needs (cutting any wants, if necessary).
Using Credit Cards without Paying Them In Full. When possible, only use your credit on things that you can pay off in full. Having a credit card is a good idea because it builds credit and you can get some nice rewards, but don’t max it out just because you can. Instead, buy things on your credit card, but pay them off in full before the deadline—this will prevent unneeded interested accruing against you.
Not Having a Savings Account or Emergency Fund. Having a savings funds or emergency money is great, but don’t just store away all your cash like that. This makes your money become stagnant, making it less valuable as inflation increases. Instead, put some money aside for emergencies, and then invest the rest in stocks or something similar.
Buying Expensive (new) Cars. If you’re out looking for a car, consider looking at a used model. Even a car that’s a year old is going to be a much better deal than this year’s newest model. Cars can never increase in value, they only depreciate, so buying a new car similar to throwing money out of the window.
Spending Too Much on Food. Food can be a huge hidden expense. Try to sit down and make a meal plan for the week. This will keep you focused so that, instead of buying a $10 meal at lunch, you can pack your own for a fraction of the price. Over a year, this can save you thousands of dollars.
Not Setting Financial Goals. To get your financial life on track, it’s important to set financial goals. This are things that you can work towards so that your money is being spent or saved with purpose. Make some financial goals and then stick to them!
Not Discussing Finances as a Couple. If you’re married, then sit down with your spouse and talk to him or her about your finances. I cannot stress how important this is! Not only will it help your marriage, but you’ll see your money start to bulk up. There are 6 Critical Financial Discussions every married couple should have. Once you’re both on the same page, there will be less frustration between both of you and you’ll have twice as much energy and will power to reach your goals.
Not Paying off Debt in a Smart Way. Debt has a nasty way of sticking with us and ruining any happy financial prospects we may have. If you have debts, don’t spread your money across all of them, but focus on the smallest one until it’s gone. That way, you won’t be paying interest on it anymore, which gives you more money to throw at your larger debts. This is called a debt snowball and it really works.
Being Complacent at Work. We live in a very competition driven world these days. That can sometimes be frustrating, but it can also work to your advantage. If you feel like you deserve a raise at work, then talk to your boss. One huge money mistake we make is not being aggressive enough in the workplace. If you are worth more than you are being paid, talk to your superiors. If you aren’t satisfied with your pay, look elsewhere for work that will pay you what you are worth.
Focusing on Everyone Else’s Finances. It’s way too hard to work on your own financial goals while you are working hard to “keep up with the Jones’ is probably the least productive thing you can do with your time and energy. Everyone’s life is different—that’s a fact of life. So trying to compete with someone else is only going to make you upset and, probably, in debt. Focus on yourself and your situation and do what works for you.
Spending too Much on Gifts. You don’t need to spend tons of cash to show your friends and family that you love and appreciate them. It might be tempting to buy a really nice present or gift for a loved one, but don’t do it if you can’t afford it. Showing love in a different way for them.
Not Investing in Your Retirement. Start now, no matter how old you are, to invest in a retirement plan. You’ll want to make sure that you have enough money when you’re older to actually support yourself when you stop working. The way you choose to invest your money now can greatly affect how happy and stress-free your life down the road will be.
Buying Things at Full Price. Whenever possible, don’t buy things at full price. That’s not always going to be the case for everything, but you can often find great deals or gently used items that are much more cost-savvy than brand new ones. Even if you have to wait a few weeks for something to go on sale, it will be worth it in the long run.
Not Being Able to Say “No.” Remember that it’s okay to say “no” sometimes. If you don’t have the money to invest in your best friend’s new business or you can’t afford a nice vacation this year, that’s okay. Financial situations change, and be honest and upfront with yourself and others (when necessary) if some cuts and changes need to be made.
Your Happiness from Relying on Money. Lastly, remember that money doesn’t equal happiness. Don’t get so wrapped up in your finances that you forget to enjoy life! Yes, it’s important to have a plan for your money, but that doesn’t need to consume your life. Be responsible with your money, and then focus on what makes you happy.