Do you ever wonder if you’re making mistakes with your money? If so, you’re not alone. It can seem so easy to go wrong, so we’re going to discuss some of the most common money mistakes that people make every year. By understanding these mistakes, you can correct them and improve your financial future instantly!
We know this will cause some people to raise their brows, but not having a plan is one of the biggest money mistakes you can make. How can you save for retirement, your kids’ tuition, or a rainy day fund if you don’t have any idea what you need or want? Often, people aren’t aware of the full financial picture until it’s too late. If you want to get ahead, start by creating a budget and goal list.
Failing to Budget
Closely related to not analyzing your financial position, failing to budget is another one of the worst money mistakes. A budget allows you to see where your money is going and make necessary adjustments to ensure you’re living within your means. It also allows you to track your progress towards financial goals and can help keep you accountable. With no budget and a poor understanding, you could be throwing away thousands each year.
If you have a lump sum of money sitting in a savings account, you’re not doing much with it. Sure, it’s safe and accessible if you need it but it’s not going to grow. Inflation will slowly erode the value of your money and you could be missing out on opportunities to make more money. Whether you choose a business, real estate, or something else altogether, educate yourself and work with experts to invest wisely. For example, a property investor course can get you started in the right direction.
Not Comparing the Market
Every year, you pay out for car insurance, life insurance, mortgage payments and more without really knowing if you could be getting a better deal. One of the worst things you can do is just allow your coverage to just continue without comparing the market because this is what companies rely on.
Sadly, you could be overpaying by hundreds of dollars every year without even realizing it – since companies rely on people not bothering to change providers, they overcharge quotes. Even if you plan to stick with the same provider, compare the market anyway so you can explain to them the better offers you’re getting elsewhere (they will likely reduce their quote to match or better it!).
Not Paying Down Debt
Next, if you’re not actively working on paying down your debt, then you’re needlessly wasting money on interest payments. While it’s not always easy to pay off debt, it’s important to have a plan and make progress. Even if you can only afford small payments, any little bit helps. Wherever possible, consolidate your debt so you’re only making one payment each month. By doing this you’re likely to pay more of the actual debt down rather than just the interest (especially if you get a no-interest or low-interest welcome bonus!).
Finally, another mistake people make is forgetting about retirement. It’s easy to get caught up in the here and now, but it’s important to think about your future. If your employer offers a retirement savings plan, make sure you’re contributing enough to take advantage of any employer matching funds. If not, open a retirement account on your own and start contributing as much as you can afford. The sooner you start saving, the better off you’ll be when you reach retirement time.