Financial stress affects every aspect of your life. We are living in a society where we can just charge, charge, and charge. It seems like we are never satisfied. There will always be the latest gadgets, cars, and fashion to buy. With so many options, it’s easy to make financial mistakes. These mistakes will get you out of your depth and ultimately take control of your life. Read on for seven common financial mistakes and make sure you don’t ever make them again.
1. Paying unnecessary ATM or bank fees.
Banks are established to make money. With so much going on in life, it’s easy to not check your accounts on daily basis. This financial mistake is common and can really become a problem. ATM and bank fees add up over time, and if you’re not aware of how many fees your bank is charging, you will continue to lose money. Speak with a representative from your bank and be clear what the ATM and bank fees are. This will help you avoid unnecessary fees. Furthermore, you may want to check out some banks that literally have no fees, like Capital One 360 or Charles Schwab.
2. Ordering too much take out.
Let’s face it: we have busy lifestyles. We can have a very hard day at work and come home late. When this happens it’s very difficult to be motivated to cook a nutritious meal. It is so much easier to just order take out on the way home. Nutritional value aside (this could be a whole other topic!), the price of ordering take out on a regular basis can seriously add up over time. Sometimes Chinese food can be from $10, $12, and sometimes even $15. And who doesn’t love ordering Chinese food every once and a while? Just keep in mind, you could spend that same money and buy something like the ingredients for a healthy pasta from the grocery store. Aim for things that allow you to cook enough for leftovers. You can always bring leftovers to work on your way out the next morning. Leftovers = One Free Meal = You Save Money.
3. Not telling your money where to go.
Money was meant for spending. What’s the point of having money if you don’t eventually spend it? Most of us understand this; it’s probably instinctual. We see money in our account, and we usually have an inclination to spend it. If you don’t tell every penny of your money where to go, there is a very good chance it will disappear. The crazy thing is, most of the time money disappears by small, seemingly insignificant purchases that add up, like ordering take out or eating fast food, magazine subscriptions, clothes, movies, etc.
In a nutshell, the best thing to do with your finances is to calculate how much income you make and subtract the total amount of your bills and your expenses throughout the month. In your expenses, if you can, be sure to specifically allot a certain amount of “fun money” for yourself, which allows you go out and buy magazines and clothes, etc. If there is any remaining money after you subtract your expenses and bills from your income, put that aside for some savings goals.
4. Never making priorities in life to decide where your money should go.
It’s crazy to think that so many people rarely, if ever, stop and actually think about what things in life make us happy. It makes sense to spend money on the things that make us happy, right? Unfortunately, many people live on autopilot and continue to let their money slip away from them on small, insignificant things that ultimately don’t matter. Don’t make this mistake! Instead make happiness a priority and organize your finances so you can spend money on things that will be fulfilling to you. It doesn’t have to be expensive, either. It could be as simple as just paying a baby sitter so you can spend a few hours of quality time with your spouse.
5. Starting a retirement account too late.
This is a very common mistake. It can be difficult to see the consequences of not investing in a retirement account. Because there is no instant gratification in saving for retirement, it might be hard to be motivated. Put simply, every day you delay saving for retirement you are hurting yourself. Because of the percentage rate of retirement accounts, your money actually compounds over time. Time is the key word here. If you start early you will actually be making good money by the time you retire. Dave Ramsey recommends to put away $250 a month. The best time to start an IRA account is literally as soon as possible. So start now!
6. Not paying off loans and debt as soon as possible.
This is the exact same concept as point 5, except the situation is reversed. If you have any debt at all, you want to do your best to pay that off as soon as possible. Over time, your account balance won’t be ‘making money’. Instead, you’ll be losing money. The longer you wait, the worse things will get. If you wait too long, debt can spin out of control. Don’t let this happen to you. Make it a priority to pay off any debt you have and avoid accruing any more if you can help it. The best way to handle credit cards is to always live below your means and pay the account balance in full at the end of every month.
7. Not living within your means.
There is a misconception that if you have good-quality things in your possession, you feel good having them and you will feel good when people see that you have them. Not true! Driving a Toyota Corolla with little debt is better than having a Mercedes-Benz you can’t afford and tons of debt.
The truth is, there may be a legitimate amount of satisfaction from having good-quality things. In fact, there’s nothing wrong with having expensive things. The trouble comes when you overspend way outside your means in order to purchase something. The stress that follows is not worth it. There is no price to having a happy, stress-free life. The amount of satisfaction from owning something purchased beyond your financial means wears off after a while. At that point, all you are left with is the financial stress. Why invite troubles into your life? Remember: smarter is better than sexier!