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20 Common Money Mistakes To Avoid

20 Common Money Mistakes To Avoid

Ever wonder where all your money goes right after payday? Spending money is way too easy. It is so easy that it makes saving it look extremely hard! It is very simple to save money though it isn’t something that happens over night, you need to work on changing a few habits. There are several steps you can take to help you along the way on the road to financial success. You don’t need to be a mathematician to sit down and take an hour to analyze your spending and income to create a budget.

You can start by stepping back and going over your bank statements, or have an app categorize them for you. Divide them up into sections such as fast food, bank fees, bills, etc. When you actually take a look at what you spend and have an actual dollar amount on things, it will open your eyes. After you have seen where you spend your money, it would be best to set a budget.

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To set a budget, you need to compare how much you are spending and how much you actually make. Set money aside to take care of yourself and your well-being first. This will include expenses like your bills (food, utilities, rent) and putting money aside in a retirement fund. From there make sure you give yourself an allowance because, well, living frugally is not fun.

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After you have set some money aside for your well being, your fun money fund, and your savings, you need to make sure that you are thinking about your debt to income ratio. Take a look at all what you owe everyone and how much time and money it will take to pay them back. A majority of these expenses are going to be credit card companies and student/bank loans. The sooner you pay it off the better it will look in your bank account and also on your credit report. Don’t pretend that credit isn’t something that affects you, it affects everyone. So don’t cancel all your credit cards once you pay them off, keep them open. An open line of unused credit looks good if you are looking to buy a house or a car in the near future. Saving for the down payment and the interest will be a lot better.

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Some of you are thinking that the Fun Money Fund (FMF) is a little ridiculous, but it is necessary! You want to make saving easier so that you will keep doing it. You have lived off an allowance before for things that aren’t a necessity (most of the time it was no more than twenty dollars here and there) and you can do it as an adult. Want your FMF to grow? Pay off more of your debt and you will have a little wiggle room. Seventy five percent of that monthly payment to unnecessary bills and services could be going to other areas that need to be paid off, and the other twenty five percent of it can go into your FMF!

You may be thinking, where can I get the extra money from to pay the rest of my bills? The answer is in cutting back spending in your daily habits. Here are some common money mistakes people make everyday. See if any of them sound familiar:

  1. You keep putting off paying off your credit card debt

  2. You don’t have a savings account for emergencies

  3. You go grocery shopping when you’re hungry

  4. You enjoy frequent shopping for retail therapy

  5. You don’t maintain an allowance for fun spending

  6. You don’t define the difference between want vs. need

  7. You never read fine print

  8. You’re always trying to keep up with trends and fashions

  9. You’d consider going into debt for a wedding

  10. You prefer to buy a meal instead of preparing it

  11. You haven’t made a plan before taking out a student loan

  12. You don’t think you need to have a budget

  13. You haven’t been paying attention to your credit score

  14. You buy items based on the price and not the quality

  15. You spend more than you make

  16. You want to get a larger house and mortgage than you need

  17. You are dependent on one source of income

  18. You’re not saving for retirement

  19. You replace things that aren’t broken

  20. You’re not paying attention to your debt to income ratio

Featured photo credit: 401(K) 2012/mmoney via flickr.com

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Margielyn Musser

Event And Volunteer Coordinator / World Traveler

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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.

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Featured photo credit: Austin Distel via unsplash.com

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