Managing money and expenses is a hard job on its own, and despite the immense amount of financial advice you can find on the internet, even the most money savvy people find themselves making major mistakes. Here is a list of the 10 biggest money mistakes people make, so you can know how to avoid them:
Short-term budgeting- One of the biggest tips for saving money is to create a budget for yourself, but where a lot of people go wrong is in the scale of their budget. Creating an annual budget will do you a lot more good than a monthly budget, so you know just where your income allows you to be spending money.
Credit report knowledge- You must always know where you are spending money and what your credit report looks like, so you can stay out of debt. You can get a free credit report once a year from each of the three credit bureaus- so be smart with your debt and finances, and obtain a report every four months out of the year.
Wasting savings- Saving money is becoming even more important with the economy. When you look at where you are spending money, and figure out a strict budget of where you could be saving instead of spending, you will be on track to a more stable financial situation.
Passing up retirement plans- Not participating in your company’s 401k or other retirement plan is not just keeping you from saving money for your future, you are missing out on potential tax deductions. Being a part of these plans is not spending money frivolously, but rather saving money toward a better life in the future.
Focusing on the small without sight of the big- Many people are spending money and effort on small discounts and rewards that don’t actually aid them in saving money. Clipping a coupon for something that you then have to drive across town to buy doesn’t make much sense, and won’t benefit your budget in any way. Keep your eyes on the big picture and don’t…
Fail to budget for major upcoming expenses- Having an emergency savings account is crucial if you own a home, a car, or have a family to take care of. Failing to plan is planning to fail! You know certain things will come up at certain times of the year (needing to pay for new tires or summer camp for the kids), so start saving money each month to budget ahead of time.
Buying name brands- Spending money on the pricier item because of the box its in is a major money mistake. You can find a store-brand item almost every time with the same exact ingredients in it, at a lower price. The same goes for buying clothes; there’s no need to be spending money on a pair of jeans, when the exact same ones will show up in a discount retail store a week later for $20 less.
Being uneducated- Whether this means failing to communicate with your significant other about spending money and saving money, or not taking advantage of budget and financial tips from other people and sources, information is motivation to keep your money situation in order. Take in everything you can, and have open communication about spending money in your home.
Not paying off debt- Spending money on interest from credit card balances or student loans is keeping you from saving money. All of that interest is holding you back from financial freedom, and can be cleared up with a simple budget to help you pay off that debt.
Small leaks in your wallet- Many people don’t realize how much money they waste on small things because they’re just that- small. But spending money on bottled water, eating out, leaving lights on, and grooming your pet can add up quickly and be a drain in your budget that you don’t even recognize. Asses and identify where these leaks happen, and figure out a way to plug them up.