5 Money Mistakes Everyone Makes

Money mistakes happen every day. It’s unlikely that you are the only one having financial regrets. Research conducted in 2019 suggested that a total of about 126.5 million American adults admitted to having made money mistakes in their lifetime. 

Personal finance is an important concept you need to master to avoid making money mistakes. Money mistakes can be subjective. Before you regret taking that student loan, remember that you needed that university degree. However, there are common mistakes related to managing expenses that you should avoid for a financially fit lifestyle.

  • Not Budgeting

Not budgeting your money can lead to a lack of savings, out-of-control spending, less financial security, and higher chances of going into debt. When you operate without a budget, you find it hard to handle unexpected expenses and achieve financial goals.

A budget can help you manage your money responsibly. The good news is that it’s never too late to start practicing budgeting. Start by estimating your monthly income, create a journal for your monthly expenses, try the 50/30/20, and save. 

Lack of budgeting can make you lose focus on your financial goals. You might find yourself comparing your life to others, resulting in negative financial behaviors such as spending beyond your means or taking out loans to purchase things you cannot afford.

Living without a budget can increase stress and the feeling of not having financial control. Lack of budget can also make you feel unfulfilled with your financial life. In essence, the consequences of not budgeting are not worth the risk; therefore, make budgeting a habit.

  • Not Tracking Extra Payments

Not tracking unexpected payments is a common money mistake that you need to avoid to help stick to your budget. Tracking payments involves identifying your expenditures throughout the month and can hold you accountable for your finances. 

If you don’t track your money, you won’t know when and how to stop spending. Equally, if you don’t know where your money is going, you cannot recognize negative spending behaviors that you need to change to make money work for you.

Track your payments at the end of the month, review the expenses you would have tracked against what you had planned and see if there is a mismatch. Tracking your expenses can also help you identify services you might have been paying for, yet you don’t use them. It might not be easy, but it puts you on the financial track and helps you meet your financial objectives.

  • Using Credit Too Often

Accumulating credit card debt is one common financial trap that can make you live beyond your means. It’s common to have debts in student loans or car loans. However, stacking credit card debt on top of such debts can cause more financial stress. 

If you already have accrued a big debt on your credit card, it’s never too late to recover. Find a payment strategy, consider refinancing your credit card debt, look for a second temporary job, rework your budget, and talk to your creditors about your repayment plan.

You can minimize the impact of dangers associated with credit cards by following a few basic principles. Just like using any form of credit, make sure that you avoid complacency and maintain a sense of financial discipline to improve your credit score. 

  • Never Saving

Another financial mistake you are likely to make is not having an emergency fund to run to when the unexpected happens. If you do not save, you might be forced to use expensive ways to finance your life and take care of emergencies. This may include relying on payday loans, taking a cash advance, or racking up credit card debts.

Start off small. Any amount saved can take a considerable amount of financial stress off your shoulders. Saving can provide financial security and freedom and secures you in a financial emergency. Saving can help you try new things and invest for better financial days to come.

  • Not Shopping Around

You will get it wrong financially if you don’t shop around. Comparison shopping means smarter spending of money because accepting the first price you see might not give you value for your money. Don’t overvalue your time. Take your time to shop around for the best deals on groceries or any other item you could be looking for.

The Internet can reduce the time spent shopping. Simply do a quick search on the item you wish to purchase, say, discounted kids prescription glasses, and browse through best deals. Don’t dismiss small savings on purchases.

Never Too Late To Change

Financial pitfalls are common. Even with the right financial intentions, you could still find yourself making financial mistakes. It’s never too late to recover from a financial mistake. Neither is it too early to learn how to avoid them. 

Photo by Artem Beliaikin on Unsplash

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