We’ve all made them. It’s easy to inadvertently make money mistakes. I’ve made almost all of them. These are my top 15 money mistakes.
Live frugal and build wealth by being smart with your money. Even if you’ve made dumb choices financially, every day is a new day, and there’s time (no matter how young or old you are) to make things right.
15 Money Mistakes You May Be Making
1. Comparing Yourself to Others
It’s easy to do. Social media has made it possible for constant highlight reels to flash before our eyes several times a day. The pressure to keep up can be intense. Don’t live your life to impress others, or compare your finances to your friends or neighbors. Good or bad their situation won’t pay YOUR bills.
2. Taking MONEY Advice from “Broke” People
According to a CareerBuilder survey nearly 77% of Americans live paycheck to paycheck at least some of the time. Which tells you that we’ve all got a little to learn about money, and it’s unlikely that your co-workers have it all together financially, despite their flashy clothes and expensive cars.
Therefore, your friends and co-workers may NOT be the best people to take advice from regarding the best time to buy a house, or to know if you truly do “deserve” a lavish (and pricey) vacation this summer.
3. Not Reading Fine Print
Sales agreements have fine print. Anytime money is involved, it’s in your best interest to FULLY understand the terms. Blindly signing paperwork shoved in your face is a sure-fire way to lose your butt, financially. Salesman aren’t all bad people, but they are in the business of selling. Look out for hidden fees, variable rates, due dates, etc.
4. Neglecting to Comparison Shop
Need work done on your home? Buying a mattress? Getting married and need a Photographer? Well, it might seem easiest to go with the first salesperson or professional you interview, but it’s unlikely to be the smartest when it comes to money.
Don’t be pressured into buying or signing on the dotted line immediately. Even if the first price quoted isn’t guaranteed after you walk away — walk away. Comparing prices with or at multiple places is the BEST way to guarantee the BEST price or service.
5. Lack of Life Insurance
If something were to happen to you or your partner, the last thing you need is to be worried over finances on top of your grief. Seriously! If there is anyone who relies on your income, you need life insurance. My husband and I both have 20 year term life insurance policies, equal to ten times our annual income.
6. Relying On One Income Source
Even if you’re a single income family, you can take steps to create additional streams of income. Mutual Funds, Income Property, side hustles or relationship leads that could result in quick work such as babysitting or yard work. If all your eggs are in one basket, if that basket tips over, your family is left without any eggs. Diversify!
7. Eating Out More Often Than Not
Restaurants are nice. But, they’re expensive, and short-lived. The money you’re spending eating out could add up BIG time. If you ate more meals at home, what else could you be doing with that money. I’m sure you have something. Plus, it’s likely healthier as well.
8. Replacing Things That Aren’t Broken
The grass is always greener on the other side, and there’s always a bigger, better, badder house or boat or camera. Whatever it is for you, there’s going to be a newer model out soon enough. But so long as yours is still functioning, why replace it?! There’s no need.
9. Neglecting To Open Your Mail
When you’re feeling broke, the last thing you want to see if mail. It’s likely just another bill that you can’t pay. But ignoring it doesn’t make it go away. It only makes it grow fangs. Late fees and collection notices will still happen even if you don’t know about them.
10. Not Making A Budget
Every SINGLE month, do a budget. That simply means you’re writing down on paper how much money is coming in, and how much is going out. It doesn’t mean you can’t spend money, it means you can spend it – however you’ve decided at the beginning of the month, according to your budget.
11. Leaving Money Floating Unassigned
If you have extra money floating around in your bank account, it’s going to float out. Be the boss of your cash and tell it where to go. Transfer it into a savings account designated however you see fit.
12. Forgetting to Budget FUN
Set aside some money to enjoy life. It doesn’t have to be a lot. In our household we call it “mad money”. Cash set aside for whatever we feel like spending it on. Food, books, clothes or coffee.
13. Grocery Shopping Hungry
Duh! I’m sure you’ve heard this one before. That’s because it’s true. If you grocery shop while you’re hungry you’re SURE to throw more food in your cart. Everything is going to be making your mouth water and it’s likely going to bust your budget.
14. No Emergency Fund
It’s going to happen. Emergencies are inevitable. If you don’t have money set aside to deal with them, you’ll likely reach for a credit card when it hits.
I saved the best for last. Debt is the BIGGEST mistake of them all. It’s easy to put on, but next to impossible to get off. The best solution is to never acquire it in the first place. Debt steals your peace and robs you of wealth. The more payments you’re making to debt to less money you have to add to investments or savings accounts.