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10 Money Mistakes You Can Easily Make

10 Money Mistakes You Can Easily Make

It would be hard to go through life without ever making a money mistake. Making a money mistake isn’t always a bad thing though. You need to recognize that you made an error and making a correction to change for the better. Here are 10 possible money mistakes that you can easily make.

1. Not having retirement or investing on your mind.

Many people think to themselves that they have plenty of time to save for retirement and that they don’t need to start just yet. However, that is not always the best way to think about retirement. Saving money now can help you down the road because every little bit counts.

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2. Not having a will or trust.

Going without a will or trust is not a good idea. You want to be able to determine what happens to those you love and what happens to the things that you have if something were to happen to you. Also, setting up a trust can help your family out if you don’t think that they will do what is best for them with the money that you leave them. This way you can continue to take care of your family if something were to happen to you.

3. Having debt.

Regardless if you classify your debt as “good” or “bad,” if you are paying a high interest rate because of your debt and losing money, then this is probably a money mistake. If you can’t earn a higher return for your money, then you should be paying off your debt as fast as you can so that you can start earning a return on your money.

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4. Not thinking about an emergency fund.

Do you have an emergency fund? Some say that you should have $1,000 (if you have debt), others say that you should have six months. You need to determine what is right for you and what you feel comfortable with. A good emergency fund can protect you if an unexpected expense were to come up. An emergency fund may be saved to cover a job loss, home repair, a cut in hours and so on.

5. Going without insurance.

Going without insurance can be one of your money mistakes that you make. You should always try to have some level or car insurance, health insurance and life insurance. Going without these forms of insurance or an adequate level could mean that you will have to pay a large expense if something were to come up.

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6. Not saving money.

Are you spending more money than you bring in each month? You should be aiming to save money each month and not spend every single penny.

7. Going without a budget.

No matter how much money you make, you should have a realistic idea of what your income and bills are each month. If you are making $200,000 every year and spending $200,000 every year, then you are not doing the best even if you think you are. Having a budget can show you where you are making mistakes and where you can possibly improve.

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8. Lending money to others without thinking about the consequences.

If you ever lend money to others, then you really need to think about the consequences. Whether you lend cash directly to them or you cosign on a loan, there are negatives that could possibly happen. You have to be prepared to lose when lending money to others.

9. Using credit cards as a form of income.

There are many people out there who are bad with credit cards and use it as a form of income. If you think that you will rack up credit card debt, then leave your credit card at home! Also, only buy what you can truly afford.

10. Trying to keep up with the spending of others.

Do you find yourself spending more in order to keep up with the spending of others? Maybe someone bought a big house and you feel the need to buy a big house as well. Whatever the case is, you should analyze why you actually want something, especially if it is a big purchase. You should learn to be happy with yourself and realize that material purchases do not make you a better person.

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Published on September 17, 2018

How Being Smart With Your Money Leads to Financial Success

How Being Smart With Your Money Leads to Financial Success

Achieving financial success is not something that just happens. Maybe if you win the lottery or something, but for the average person like you or me, it comes from a series of small steps you take over a long period of time.

With each step, you form a new smart money habit. And with each smart money habit, you build towards financial independence.

So what sort of habits can you form to get on that path? Let’s take a look at smart money habits you can start today to get you closer to a financially independent future.

1. Avoid being “penny wise but pound foolish”

It’s tempting to try saving a couple cents here and there when buying small items. However, that’s not where the real money is saved. You’re putting in extra effort for something that doesn’t move the needle.

You get the most bang when you’re able to cut down on your bigger bills. For example, finding a lower interest rate for your mortgage could save you $50+ per month. And cutting your transportation bill by purchasing a cheaper car or taking public transportation can provide large gains as well.

So, look at your recurring expenses such as housing, transportation, and insurance, and see where there’s wiggle room. It’s a much better use of your time than trying to pinch pennies here and there on smaller purchases.

2. When you want something big, wait

Impulsivity can get you in trouble in most aspects of life. Finances are no different.

It’s human nature to see something and want it right then and there. It starts as a kid in the checkout line at the grocery store, and it continues on through adulthood.

We get an idea in our head of something we want, and it’s hard not to go out and get it right then.

A good example is wanting a new car. Perhaps you’ve had your car for several years. It’s crossed the 100k mile mark. Maybe maintenance is due, and you’re annoyed that you need to replace the timing belt or purchase new tires.

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So, you get the itch.

You start digging around online, and you realize you could trade in your current car for something newer and more exciting… all for a few hundred bucks a month. Then you get obsessed.

Here’s where you have to take a step back.

Your newfound obsession is clouding your judgement. Rather than giving into the impulse, wait it out.

Set a timeframe for yourself. Maybe you come back to the decision three months down the road. See if the obsession lasts.

It might, but often, a funny thing happens. Often, you forget about it. And often, you find that the new car wasn’t a need at all.

The impulse faded. And you just saved yourself a ton of money.

3. Live smaller than you can afford

You finally get that big raise. And you want to celebrate – and why not?

You’ve been looking forward to this forever. And after all, it was all due to your hard work.

That’s fine, splurge a little. However, make it a one-time deal and be done.

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Don’t get caught in the trap that just because you’re now making more money, you should spend more.

Too often, people get more money and feel like they that gives them the means to buy a bigger house, a bigger car… you know the drill. Resist.

The fact is that living smaller than what you can afford is one of the fastest ways to build savings.

But if you constantly upgrade as you begin to make more, then you’ll never get ahead. You’ll just build up more debt along the way and have just as little wiggle room as before.

4. Practice smart grocery shopping

Food… it’s one of the biggest portions of any budget. And if you’re not careful, it can be one of the biggest drains on your wallet.

But luckily, there are a few things you can do to ensure that you stay smart with your money when buying groceries.

Create a grocery budget

Set a strict weekly grocery budget. When you know how much you can spend on groceries, you can then plan your weekly menu around it.

Once you know what all you need, you can go shopping and keep a running tally as you shop to ensure you’re on track.

I tend to do this in my head, rounding for each item. However, writing it down as you go would probably work best for most people.

Make a list… and never deviate

Never go to the grocery store without a list. If you go to the store with a ballpark idea in mind, you don’t have a true ide of what you need.

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You’re not well-researched. You don’t know what the sales are. As a result, you’re going to make decisions on the fly.

These impulse decisions will lead to overspending, which will derail your grocery budget.

Eat before going grocery shopping

It’s also important to eat prior to going to the grocery store. Hunger is a powerful force.

If you’re shopping on an empty stomach, everything is going to look good. In particular, you may find a lot of ready-made, processed snacks will look enticing.

After all, you’re hungry now and that food is easily available. So subconsciously, you may lean towards those items.

Unfortunately, not only are those items typically less healthy, but they’re likely more expensive. You pay for convenience.

However, when you eat prior to shopping, then you’ll shop with a clear mind. Your hunger won’t cloud your judgement, influencing you to make poor decisions like a cartoon devil resting on your shoulder whispering in your ear.

This makes it much easier to stick to your grocery plan.

5. Cancel your gym membership

Now that you’re all set on your food, it’s time to get smart about managing your budget in terms of physical fitness. And let’s begin by avoiding the gym. The gym bill, that is.

The average gym membership costs around $60 per month. That’s $720 a year.

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Yet, two out of three gym memberships go unused. That means two-thirds of people who have a gym membership are literally giving away almost a thousand bucks a year. It’s crazy!

I recommend seeking an alternative. One good alternative is to look into fitness streaming services.

Streaming services allow you to stream hundreds of workouts like Insanity and p90x, right in your own home for around $10-20 a month. That’s $40-50 less a month than the average gym membership.

Of course, then there’s the free option. The internet is full of free workouts that you can do on your own with minimal or no equipment.

For example, there’s the Couch to 5K program, that I personally used a decade ago to ease myself from couch potato to running my first 5K race. If I could do it, anyone could.

Then there are free resources like reddit that have limitless information on workouts. The Fitness subreddit has done all the research for you, populating workout tips and detailed workout routines for anyone to use in their wiki.

There are several routines that require no equipment. And you can join in on the subreddit to become part of the community, making it easier for those seeking comraderie and encouragement in their fitness goals. All for free.

It’s baby steps… And baby steps can start now!

I’ve never met anyone that can’t stand to be a bit smarter with their money. And on the flip side, anyone can get smarter with their money. But remember, it doesn’t happen all at once.

Begin by fighting your impulses. Prepare for the week and be smart at the store. And cut monthly expenses like gym memberships that are overpriced and you probably aren’t getting your money’s worth out of anyway.

The devil is in the details. And the details can change your lifestyle and prep you for a financially independent future.

Featured photo credit: Unsplash via unsplash.com

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