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10 Common Money Mistakes You Probably Make That Can Ruin Your Finances

10 Common Money Mistakes You Probably Make That Can Ruin Your Finances

Personal finance is easier said than done. Common money mistakes are made all the time, and they might even ruin your finances. Here are 10 common money mistakes that you may be making.

1. Underestimating your insurance needs and not getting enough.

Insurance is very important, and there is probably a good reason for why you may need it: health insurance, life insurance, car insurance, home insurance‒you name it. You need to value the savings that you are getting and weigh them against how much insurance that you actually need.

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2. Not saving enough.

Not saving enough is another common money mistake that you may be making. You should always strive to spend less money than you earn, it would be impossible to save if that was not the case.

3. Not paying your mortgage on time.

You should always try to pay your mortgage on time. Yes, something may come up which might mean that you don’t have enough cash to pay your mortgage that month. However, this is why it is always important to have an emergency fund.

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4. Ignoring your partner’s bad money behaviors.

If you have a partner, then I’m going to guess that their finances and money behaviors at least somewhat affect you, whether you have joint or somewhat separate finances. You should try to be on the same page, or at least in the same book.

5. Carrying a balance on your credit cards.

Carrying a balance on your credit cards is a big money mistake that many people make. You don’t want to do this. If you have a balance on your credit cards, it means you are paying high interest charges on your credit card, which means you are paying more than you have to for the things you are purchasing.

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6. Lending other people money, or cosigning on a loan.

Lending others money or cosigning on a loan is not often a good idea. You do not want to be stuck in the middle and lose money, so it is usually best to not let money get between you and a relationship.

7. Going without a budget.

No matter how much money you make, you will probably need a budget. If you make $100,000 a year but spend $95,000, are you really any better at finances than someone who makes $20,000 but spends $15,000? A budget can help you control your spending and show you where you need to make improvements. A budget can help a person think about their money a little bit harder so that they can reach their financial goals.

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8. Not caring about what you say in public.

You are probably wondering how this can be a common money mistake. Well, you might over-share on social media websites such as Facebook or Twitter.  Something like sharing an unprofessional picture of yourself could prevent you from getting the job that you want

9. Not having a plan.

You might think that you don’t need a plan, but most people need at least some kind of a plan. You need to think about your goals in life, and actively work towards achieving your goals. For example, it is extremely important for you to have some sort of retirement plan. Do you want to retire early? Or are you interested in paying off a certain amount of debt this year? Make a plan so that you can achieve these goals.

10. Not paying attention to your credit score as much as you should.

Even if you like to think that your credit score is not important, there are many cases in which a good credit score is better than a bad credit score. A good credit score may mean that you can get a better interest rate and maybe save hundreds on dollars each month in interest charges. A bad credit score may mean that you are completely denied for the loan that you want.

More by this author

Michelle S.

Founder of Making Sense of Cents, a blog about personal finance and traveling.

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Last Updated on January 21, 2020

How to Develop a Millionaire Mindset in 6 Simple Steps

How to Develop a Millionaire Mindset in 6 Simple Steps

We all like to dream about being financially wealthy. For most people though, it remains a dream and nothing more. Why is that?

It’s because most people don’t set their mind to achieving that goal. They might not be happy in their current situation but they’re comfortable – and comfort is one of the biggest enemies of growth.

How do you go about developing that millionaire mindset? By following these simple steps:

1. Focus On What You Want – And Take It!

So many people are too timid to admit they want something and go for it. When there is something that you want to accomplish don’t think “I could never actually do that”, think “I could do that and I WILL do that”.

Millionaires play to win, not to avoid defeat.

This doesn’t mean to have to become a selfish jerk. What it means is becoming more assertive and honest with yourself. You don’t have to grab off other people. There is a big pot of unclaimed gold in the middle of the table — why shouldn’t you be the one to claim it? You deserve it!

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2. Become Goal-Orientated

It’s almost impossible to achieve anything if you don’t set firm goals. Only lottery winners become millionaires overnight. By setting yourself attainable goals, you will get there eventually. Don’t try to get rich quickly — get rich slowly.

Let’s take the idea of making your first million dollars and expand on what kind of goals you might set to get there. Let’s also say you’re starting at a break-even position – you’re making enough to get by with a few luxuries, but nothing more.

Your goal for the first year can be having $10,000 in the bank within a year. It won’t be easy but it is doable. Next, you need to figure out the steps you need to take to achieve that goal.

Always look at ways to make growth before cutbacks. With that in mind, you might want to see if you can negotiate a pay rise with your boss, or if there’s another job out there that will pay better. You might be comfortable in your old job but remember, comfort stunts growth.

You may also have other skills outside of your workplace that you can monetize to boost your bank balance. Maybe you can design websites for people, at a fee of course, or make alterations to clothes.

If this is still not enough to make the money you need to save $10,000 in a year, then it’s time to look at cutbacks. Do you have a bunch of old junk that someone else might love? Sell it! Do you really need to spend $10 on your lunch everyday when you could make your own for a fraction of the cost?

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If you are to become a millionaire, you need to start accumulating money.

Here’re some tips to help you: How to Become Goal Oriented and Achieve More in Life

3. Don’t Spend Your Money – Invest It

The reason you need to accumulate money is for step three. Millionaires tend to be frugal people, and that’s because they know the true value of money is in investing. Being your own boss goes hand-in-hand with becoming a millionaire. You’ll want to quit your regular job at some point.

Stop working for your money and make your money work for you.

Rather than buying yourself a new iPad, that $500 could be used to invest in the stock market. Find the right shares (more on that later), and that money could easily double within a year.

There’s not just the stock market — there’s also property, and your own education.

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4. Never Stop Learning

The best thing you can invest in is yourself.

Once most people leave the education system, they think their learning days are over. Well theirs might be, but yours shouldn’t be. Successful people continually learn and adapt.

Billionaire Warren Buffet estimates that he read at least 100 books on investing before he turned twenty. Most people never read another book after they’ve left school. Who would you rather be?

Learn everything you can about how economics works, how the stocks markets work, how they trend.

Learn new skills. If you have an interest in it, learn everything you can about it. You’d be surprised at how often, seemingly useless skills, can become extremely useful in the right situation.

Start developing the habit of learning continuously: How to Create a Habit of Continuous Learning for a Better You

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5. Think Big

While I advise to start off with small goals, you absolutely should have a big goal in mind. If you have a business idea, then that is your ultimate goal – to start that business and make a success of it. If you want to invest your way to millions of dollars and do little work other than research, then that is your big goal.

There is no shame in not achieving a big goal. If you run a business and aim to make $1 million profit in a year and “only” make $200,000, then you’re still significantly ahead of most people.

Aim for the stars, if you fail you’ll still be over the moon.

6. Enjoy the Attention

To be successful, you have to be willing to promote yourself and enjoy the attention to a certain extent. Now the attention doesn’t need to be on yourself, it could be on your brand, but attention definitely attracts money.

Never be embarrassed to get your name out there. That means finding a spotlight and being brave enough to step right up underneath it.

If you run a business, try contacting the local papers. You’d be surprised at how amenable they often are to running a story about you and your business, and it’s all free publicity.

Above all, remember: You control your own destiny. Push hard enough for anything and you’ll get it.

More About Thinking Smart

Featured photo credit: Austin Distel via unsplash.com

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