The 10 Financial Mistakes You Might Be Making
Okay so let’s take a moment to be honest with ourselves. When it comes to making financial decisions, no one is perfect and many of us are probably making mistakes we should be avoiding, because we’re only human. However some mistakes are much more impactful than others and avoiding the larger ones will have huge repercussions for your future wellbeing. Here are some of the more common financial mistakes that are best avoided as they could severely impact your finances in a negative way.
1. Paying Full Price For Everything
Sure, sometimes you need something last minute or there simply just isn’t a discount and you just have to get something. In those cases it’s totally fine to live your life and buy what you need but it doesn’t mean you can’t try to find opportunities to save where you can. If you’re given the option to buy pasta at full price versus getting it as a BOGO, most people would reasonably choose the BOGO. Why? Well you’re basically getting more for free and dry pasta can last for a while so it doesn’t hurt to have it stored in the pantry. The same can be said of really any consumer item whether it’s food or clothing. Even when it comes to buying cars, there are ways to be savvy shoppers. Don’t buy new cars for example because they lose value the moment you drive it off the lot. Instead leverage services like Carfax to ensure you’re not getting a lemon and instead buy a used vehicle. There are tons of ways to save and in fact we even wrote a blog post previously about ways you can be better about your shopping. Granted it was focused on Black Friday shopping but much of it can definitely still apply. You can check that out here if you want to read more about that.
2. You Don’t Ask For A Raise or Change Jobs
Ok so maybe you’ve been working for a while now and you’re pretty comfortable with your job. That’s fine but it doesn’t mean that you can’t get paid more for it. Reason being the longer you’ve held a position the more knowledge you’ll have regarding your work and your responsibilities. Keep track of all you’ve accomplished and seek out areas where you can hold more responsibilities so that you can take those back to your boss and ask for a higher salary. The truth of the matter is that many employers would be willing to pay their employees more but the employees simply don’t ask for it and on part of the company it’s in their best interest to keep your salary as low as possible. So just keep that in mind and don’t be afraid to ask for a well-deserved raise. Now that doesn’t necessarily mean everyone will get a raise just by asking. Sometimes you can be stuck within a role or a company and if that’s the case don’t be afraid to find new work where you may have better chances at upward mobility. Everyone’s situation is different though and so we’ll trust you to make the best decision for yourself but just some food for thought.
3. You Buy More Than You Need
This is a big one. There are some of us that would consider ourselves minimalists where we only buy and use exactly what we need and nothing more. If you fall within that camp then keep doing you because you’re doing great! If you’re not a part of this camp though don’t fret as you’re far from being alone. In fact it’s safe to say that most people are avid consumers and it’s not necessarily your fault. Companies are using advanced technology and data to find ways to get us to spend more money and oftentimes we’ll end up buying more than we need. Yea pizza slicer and spatula combination is pretty cool but is it really necessary? Alright maybe that’s a horrible example but you get the idea. Really think about what you’re buying and ask yourself if it’s something you’ll continue using year after year or if it’s just an impulse buy that will likely gather dust in the garage in a matter of months. Be thoughtful about your spending and you’ll quickly see the impact it has on your bank account. As an extra free tip, try to avoid grocery shopping on an empty stomach because it’s much more likely you’ll throw some extra snacks and food items you don’t really need. Your wallet and scale will thank you later.
4. Taking On Financial Commitments Because You Feel Like You Have To
You’re probably thinking what kind of financial commitments would people feel compelled to get themselves into right? And rightfully so because who would really take on a massive loan they don’t need just for the hell of it. Sounds crazy right? But it actually happens when people decide to buy a house because they feel like they’re at the right age when in reality they can’t afford one. The same can be said about having a child. These have both been huge cultural milestones where people feel like at a certain age these are just something people need to do but these shouldn’t be tied to timelines based on people’s ages. Everyone progresses in life differently and you should only take on these commitments when you feel like you are financially stable and ready to do so. Taking on these responsibilities too early could lead to disastrous results and no one wants that.
5. Paying Too Many Fees
This one may be a little less egregious than the other ones but it can still add up. Maybe you’re at a restaurant that’s cash only but you’re really craving the food and so you decide to just pay the ATM fee. Maybe you have checking account fees you can avoid just by having a higher balance with the bank or maybe you’re not paying your bills on time which is adding additional fees beyond what you owe. There are countless examples of unnecessary fees that you could be cutting out of your life. Heck, even parking tickets can be considered unnecessary fees. All that money that’s going to another institution could instead be getting saved up in your bank account to better serve you in the future. So be careful and conscious about what fees you’re paying and why.
6. Too Many Subscriptions
There’s no denying it. We are now in the streaming era and though that’s great from a consumer standpoint of having a lot of great content to watch, it also means that subscription fees are piling up. Maybe you’re subscribed to Spotify for music as well as Netflix, Hulu, Disney+, HBO… You get the picture. All of these services add up in costs month over month. And that’s just for content. Who knows what other clothing, delivery, meal-prep or whatever else subscriptions you may personally have. It may be worth taking a look at your subscription list and seeing if you use all of them consistently only a monthly basis. For example, if you have a cable subscription on top of your streaming platforms maybe it’s worth considering if now is the time to cut the cord. Or if you have multiple video streaming subscriptions, do you need all of them every month. Maybe instead you can set out a schedule of shows you want to watch and only subscribe to the services that has that show for however long it takes you to watch that so you can save $15 or so dollars every month on the other services in the interim.
7. Living on Borrowed Money
This is probably the biggest offender on this list. All of what we’ve mentioned so far is definitely great advice to help get you moving towards the right direction but if at the end of the day you are spending more than you have and using credit to purchase more none of it will matter because you’re just getting yourself into a deeper and deeper hole of debt. Trying to find ways to maximize savings while continuing to spend more than you can afford is like trying to keep the Titanic from sinking by pouring water off the side of the boat with a leaky bucket. It’s simply pointless. Address the core problem first and branch out from there to improve your financial well-being.
8. Ignoring Debt/Credit Score
This in some way ties into the above because if you’re spending more than you have you’re likely in a position where you have debt and a low credit score. If not, than you’re at least one step ahead. However even if you don’t necessarily have bad spending habits it’s very easy to put debt and credit scores in the back of your mind as an afterthought because you just don’t want to think about it but it’s one of the worst things you can do. By just letting your debt sit there you’re probably paying on a plan that maximizes your lender’s returns meaning more money out of your pocket and the same can be said about poor credit scores. By not focusing on your credit you will ultimately have to settle for higher interest rates or other terms that end up costing you more in the long run. Work on establishing your credit and taking steps to increasing your score while reducing debt and you’ll be much better off for it. Not sure how to pay off your debt? Not a problem. We’ve actually got al blog post just for that as well which you can find right here.
9. Not Investing or Saving for Retirement
It’s very important that we all save up a nice nest egg for ourselves because although it’s not something people really like to think about, we’ll all be getting old and our bodies won’t always be able to hold up the way they are now. Really what we’re getting at here is that we can’t work forever and when that day comes when you can no longer earn money, you’ll want to make sure you’ve saved enough to carry you through the rest of your life. Many people tend to ignore this though because it’s a benefit for your future self to be saving and we all know it’s so much more fun to spend money on yourself now. However if you truly want to be financially stable you’ll need to develop the forethought necessary to build wealth.
10. Not Having A Plan
We’re going to end on this because really at the end of the day this can encompass almost every financial mistake. The reason we’re making many of these mistakes in the first place is because we simply don’t have a plan. We’re not setting budgets for ourselves to keep our monthly spending in check. We’re not planning out our expenses to see where we can save. We’re not paying attention to the small but significant fees in our lives. As we’ve mentioned intermittently throughout this article, by being just a little more conscious of our spending habits we can make incremental changes that can have significant impacts on our finances over time. It all comes down to having the right plan. If you’re not sure of where to start the My Home Pathway app is a great way to start. Download our app today to understand what your current profile looks like and what you need to do in order to improve.
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