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Everybody makes mistakes, I know I do. There is only one problem with making financial mistakes, and that problem is when you don’t try and fix them. In this post, I have listed some of the common money mistakes and what I suggest you do to get them right.
Spending Your Entire Paycheck
This one is a huge no-no. If there is one thing I have learned over my years, its to never spend all of your money. You definitely need to have some back-up funds or a savings account for emergencies.
I like to have savings plus I set an amount in my head that I never want my checking account to go below. If it does, I come to a screeching halt with spending and evaluate my budget. I have instilled this in my sixteen year old and now he thinks twice about purchases. He doesn’t always do the right thing but at his age, its a learning process.
You are never to young to learn about money.
Not Tracking Your Money
Being able to budget is a very important part of being financially healthy. If you don’t know where your money is going, how are you supposed to know how much you have to spend on things? I created an easy budget that helps me keep track of all my expenses.
When you are able to see what you spend, you can cut out unnecessary impulse buys or find ways to save that can help you achieve your money goals.
Waiting to Save Money
There is no better time than now to start saving money. The longer you wait, the less you will accumulate.
If your car needed a major repair right now, would you be ready and able to pay for it without using a credit card?
This financial mistake is an easy fix.
You can start with a small savings goal such as $1000. Once you have reached that, you can set your next goal for $1500, then $2000. Before you know it, you will have reached your ultimate goal and if you are like me, I get super proud and don’t want to spend a penny of it!
Its an awesome feeling when you get that first $1000 in the bank.
Not Buying Used
A big example of this is a car. Recently, I bought a Honda CRV. I looked at new ones and the sticker price was shocking.
I did my homework and remained patient. Before I knew it, I had found a 2017 with all the features I was looking for and it only had 32,000 miles on it for $12,000 less than the new price.
I couldn’t imagine a reason to spend that $12,000 if I didn’t need to.
Another thing I buy used is clothes. My favorite jeans retail for $100 or more. I use Poshmark. If you use the code SSEAWR5923, you can save an extra $10. I usually can find the brands I love here for a lot less and they are in great shape.
I can’t imagine any reason why you wouldn’t want to save money buying used.
Not Researching before a Major Purchase
Like with my vehicle purchase, researching something to find the best price is a smart thing to do. With all the resources avalible to you online now, you can pretty much find anything you need.
I recently researched a sand filter for my pool and was able to save $80 by finding what I needed online instead of buying directly from the brick and mortar store.
I enjoy finding deals so this is easy for me to do! 😉 Head over to Google, they literally have everything you could possibly think of indexed. They are also good at showing what you need.
Only Paying the Minimum
When you pay only the minimum on credit cards each month, you are actually paying mostly interest. When you do this, you will never pay the card off…well, you will but it will feel like forever and cost you twice as much.
Just paying double the minimum cuts your credit card bill repayment in half. It also messes with your credit score. And you don’t want this to happen.
A simple plan for repaying a card or even a few is to pay back the highest interest rate first. So you would pay the minimum on the other cards and chunk all the budgeted money towards the high rate card. Then when this one is paid off, you can move to the next one. Continue to pay the minimum but add the money you were putting towards the first card to this one.
Do you see where I am going with this. Plus, once you start to make visible progress, it will motivate you to keep working and before long you will be free from credit card debt.
You need a College Degree
This is a major myth! My brother is a prime example of someone who can make six figures without a traditional college degree. He is an electrician who learned on the job and his company paid for his licensure.
I know most of you wouldn’t want to to a job like his but my point is there are so many valuable, well-paying jobs that don’t require a college degree.
Lets face it, at this rate, the service industry is going to die a slow painful death and the ones who are still doing it will be charging a pretty penny because there won’t be any competition.
If you do decide to get a degree, see how to save money on college as an adult.
Not teaching your Kids about Money
This is one of the most important financial mistakes to discuss with your kids. When you teach them about money, you are making sure they can be successful in the future. I wrote an entire post about money lessons for your kids that you can see by clicking the link in this sentence.
I think its important to have money discussions even if you just explain a sale item at the store or show them how to compare prices. I even discuss household bills to my teenager so he can get a grasp on what it is like.
Living without a Budget
Like I said in the beginning, having a budget is a must. It doesn’t have to be detailed or perfect. You can start with something as simple as adding up your household bills and calling that category “household”, then have a category called “debt” and one called “savings”. Doing one even as simple as this makes you stop and see where your money is headed.
When you take control of it, you can make it work for you by being frugal and making sure you aren’t broke at the end of every month.
It’s not a good feeling I promise, I have been there before. But along the way, I figured out ways to save myself money and It feels really good.