While there are hundreds of potential mistakes people might make with money, there are some financial moves that can really set you back. Between bad habits and wishful thinking, poor financial choices can happen all the time.
Money isn’t infinite. That’s why it’s important to keep track of where you’re spending it. If you don’t know where your money is going, it’s easier to waste it. Let’s say you’re paying for subscription services you don’t use. Before long, you’ve spent $1,000 on music streaming, and you had no idea. That $1,000 you didn’t use could’ve paid down a credit card.
Keep track of your spending, expenses, debts and investments. This doesn’t have to consume a lot of your time, but keeping track will ensure you’re going in with your eyes wide open. You should know where your money is and where it’s going.
Overspending on credit cards is one of the biggest financial mistakes someone can make. If you have too high of a credit card balance, you may be heading down a slippery slope. If you can’t make your payments, then you’ll also be subject to expensive late fees and interest charges.
Financially savvy people understand the importance of keeping their credit card debt low. You’ll save a ton of money on interest, and you won’t need to pay extra fees or late charges. The lower your credit card debt is, the higher your credit score will be, too.
Being house poor isn’t a good look. This term refers to someone who uses most of their income on a housing payment. If you pay more for a house than you can actually afford, you’re putting yourself at risk financially.
Investing takes a little planning and saving to do properly. Someone who does well with money has usually planned their investments to some degree. If you’re not great with money, you may invest cash you can’t afford to lose. Make sure you’re in a good place to invest.
Financially secure people are sure of where they stand financially. If you don’t have the money to go out every night, put down your credit card and stop heading to restaurants and bars. Make a budget and stick to it.
You should never rely on credit cards and paying bills late to float you through to the next thing. Stick to what you can afford, save anything you can and don’t misuse credit. Not only will you be more financially stable, but you’ll also be less stressed about money. Living paycheck to paycheck is incredibly stressful.
Someone who’s good with their money knows that, sometimes, a quality item is worth the extra cost. If you’re buying too many cheap little items, you may end up spending more over the long run. A lot of inexpensive clothes or household items may seem like they don’t cost much, but they can quickly add up.
Eating out is expensive. Not only do you have to pay a premium for convenience, but you’re also throwing money out the drive-thru window. People who are financially stable are usually very careful with their dining-out dollars. When you do eat out, make it count and go with family or friends.
Instead of reaching for seemingly inexpensive fast food, spend a little more at the grocery store each week so you have food on hand. Plan out your meals for the week and spend some time cooking them. Be intentional with how you spend on meals out.
Weddings can sometimes cost outrageous amounts of money. It’s easy to fall into the trap of overspending on a wedding dress, cake and all the little details that you won’t ever use again after your wedding.
Retail therapy is sort of a common trope. While shopping may seem therapeutic at times, more often than not, positive feelings you get from shopping or retail therapy are temporary. After a long shopping bender, you may even end up feeling worse than you did before.
When you’re stressed, down or emotional, go for a walk instead of going to the mall or your favorite online store. You’ll feel much better about yourself after a nice walk or workout than you would about spending money you don’t have. When you’re feeling emotional, put down your wallet.
The financially stable people among us don’t skimp on saving for retirement. Your prime working years are the years that matter the most when it comes to retirement savings. Anyone who has built up a nice nest egg started somewhere. Every little bit counts, and no amount is too small.
Make saving for your retirement a priority. Max out your 401(k), and don’t put off saving for retirement until you’re older. The money you save now will compound over time. If you’re not taking your company up on 401(k) matches, you’re leaving free money on the table.
Financing and sales gimmicks are geared towards enticing you. If you can’t afford what you’re financing, don’t fall for the marketing traps. Financing deals may offer you no interest for a year, for example. After that year, you may end up paying stiff interest fees. You’ll all of a sudden get hit with much bigger payments.
If you can’t afford to pay back the financing after that first year, don’t take the deal. You’ll end up paying more than you initially borrowed, and the deal you thought you were getting will actually cost you more in the end.
New cars are one of the worst investments out there — they’re not really “investments” at all. Not only does it take decades for some cars to appreciate in value, but new cars also actually depreciate the second you drive them off the lot. If you’re someone who’s good with money, you’re likely driving a car that’s at least a couple of years old.
You can save a lot by buying a pre-owned car. You can also save money by keeping the same car for a while. Buying a new car just isn’t a good investment when you consider the massive loss you take right off the bat.