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11 Money Mistakes You Don’t Realize You’re Making

11 Money Mistakes You Don’t Realize You’re Making

If you’ve got money and you know it, take it out your pocket and show it. *snatches money out your hand and runs.* Thanks.

Here are some other mistakes you’re making with your money.

1. You Buy Extended Warranties

I’ve worked at a variety of retail stores, and they all require every employee to push the extended warranty. They do this because it’s a sale where you’re giving them money for a product they don’t have to stock. They gain free money, because the odds of you actually using that warranty are slim. If your product lasts six months, it’ll last two years, unless you break it in a way that’s not covered by the warranty anyway.

“Use warranties that come with the product or service,” says financial expert Harrine Freeman. “Keep the original packaging and receipt so if an issue arises, you can get the item fixed without delay.”

2. You Have Too Much Insurance

You’re required by law to meet certain insurance requirements for your vehicle and any collateral loan. Insurance agents will push to give you more insurance because they’re commissioned salespeople. Whether it’s your car, home or body, don’t buy more insurance than you need, or you’re just paying to keep everyone else’s premiums low.

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Also avoid cell phone insurance at all costs – these plans are difficult to use and cancel, and they’ll often charge you more to replace your phone than the actual phone manufacturer, the retail store you bought it at, or your service provider.

3. You Pay for Free Services

You can monitor your credit report for free by getting a copy once every year, yet credit monitoring services charge you for the privilege. It’s like paying to park in a free lot (which you’ll also do if there’s an event nearby). Avoid paying for anything you can do for free.

4. You Upgrade Too Often

When Apple releases a new iPhone, people wait in line for it. Android users are getting just as bad. Usually, the upgrades are minor. Sure, I can use my phone as a projector, but how often does that really come up?

Don’t get distracted by all those shiny features – buy a phone within your budget, and hold onto it for 3-4 years. By the time you upgrade, you can get a free (or extremely cheap) phone that’s still an upgrade over your current one without paying an arm and a leg

5. You Ignore Hidden Fees

Banks make their money by charging fees. They’ll charge both you and the merchants you shop at as much as possible, and many businesses pass these fees on to customers. Shell, for example, charges you for using your card. Shell is also notorious for keeping their gas prices higher because they have a branded credit card that many people confuse for a store card. The reality is that card can be used anywhere, so use it to shop elsewhere.

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“Avoid using out-of-network ATMs,” adds Freeman. “Get enough cash from your network ATM on a weekly basis to avoid fees. Avoid multiple trips to the ATM during the week. Keep track of your bank balance to avoid overdraft fees.”

6. You Don’t Save

I’ve been on my grind since I was five years old. When I was 10, I got a paper route, and my parents made me put half of my money immediately into a savings account (which was actually an envelope in a file cabinet in their house because banks don’t give accounts to ten-year-olds). As annoying as it was, it was a great way to learn about savings

You don’t have to give up half your paycheck, but you do need to put a set amount aside. Treat your savings account as your most important bill – it’s for you, and you shouldn’t short-change yourself for the benefit of any bank, grocery store, service provider or anyone else.

7. You Overpay Taxes

I get that most people don’t understand taxes. I understand that feeling of starting the year with a huge tax refund. If you don’t have the discipline to save, it can be tempting to let the government do it for you.

The problem with this line of thinking is you’re giving the government free money. They deposit it and earn interest that could’ve been yours. You think you’re making a smart financial decision, but what you’re really doing is losing money. The ideal tax situation isn’t the huge refunds advertised by H&R Block and all the other accountants; it’s zero.

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8. You Buy Things You Don’t Need

If you can’t decide between an Xbox One and a PS4, the answer isn’t both; it’s neither. You may like purses and shoes, but you don’t need so many of them. Just because you see celebrities showing off all their swag doesn’t mean you should be doing the same thing. Learn to separate wants from needs and live within your means.

9. You Join Too Many Clubs

If you have a membership to Costco, Sam’s Club, Amazon Prime, and more, you’re wasting your money. Trying to keep up on all those frequent shopper clubs is toxic too. You’ll end up spending more on fees and unnecessary purchases than you’ll save from any of their deals. Their business model is set up specifically for this purpose.

If you’re single, consider asking a friend or family member to be added as an additional user on their account. A single person doesn’t need too many bulk items, especially perishables.

10. You Waste Food

Regardless of whether it’s bulk or single serving, don’t buy more perishable goods than you can eat. Every crumb you throw away is a crumb you paid for. You may as well just dump the contents of your wallet on the ground every time you go to the store.

Track your diet – it’s good for both your health and wealth. By focusing on your food intake, you’ll have an idea of your eating habits. This will help you make smart spending decisions at the grocery store. From there, all you have to do is cook the food you have instead of going out to eat all the time.

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11. You Lack Patience

Merchants love taking advantage of our impulse to spend money. It’s easiest to see this concept with movies. If you want to see a movie on opening night, you’re paying the highest price possible. You can’t even use a coupon because it’s a special engagement. If you want to see a movie in theaters, wait until it’s in the dollar theater. Otherwise you can see it on Redbox for $1 or Netflix for free. All you have to do is wait.

Now stop making money mistakes and start living like a shark.

Featured photo credit: Nuzree via pixabay.com

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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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