The Money Mistakes You Might Not Know You’re Making
Everyone makes mistakes, but if yours are costing you extra, you need to reevaluate and make financial decisions based on your financial needs. Just because there is a new trend or someone gives you a money saving tip that worked for them, doesn’t mean it is the right thing to do for you. It is important to ask for help when it comes to money management if you are unsure of what to do. Here are some mistakes you might not know you’re making and some solutions to help you get back on track:
- Mistake: You have too much money in your bank account
It must be nice to look at your checking account and see a large sum of all your earnings, but is it really working for you? All of that money is just sitting dormant rather than generating interest.
Solution: Your money is better suited for a savings account if your checking account is overloaded with funds. A savings account can help you safely store your money while creating interest. You can also work with a financial planner to make sure this is the right decision for you.
- Mistake: You’re cutting back on smaller purchases
It’s always essential to stick to your budget, but skipping your morning latte isn’t as important as focusing on bigger expenses like your car payment. Though cutting out small purchases may be beneficial to help you save money in the long run, it does not change the fact that you have increasing debts and other outstanding payments that need to be taken care of first.
Solution: Focus on large, unpaid expenses first. Chances are those expenses are accruing interest and it is crucial to clear those payments before worrying about cutting out smaller expenses that may not make that much of a difference.
- Mistake: You are a part of too many clubs and have too many memberships
Most of the time you get persuaded in to joining clubs or memberships from certain businesses. Some of these can be quite costly with monthly and additional fees that add up over time.
Solution: Ditch the memberships and retailer-specific credit lines you truly don’t need. If you barely use the membership or rarely shop with the business, is there a point in continuing to pay for something you seldom use? If you think you’d like to keep a membership, you could always ask a family member or friend to add you as a user on their account, which can sometimes be more beneficial.
- Mistake: Being impatient
Sometimes it’s hard to wait even longer for that one item you’ve been coveting since it’s released, but it could be more expensive if you buy immediately. Being impatient can mean you’re always paying the more expensive price whether it’s a big ticket item or just a movie ticket.
Solution: It may worth it to play the waiting game. Try to wait until the price of the item gets reduced if you’re looking to buy something pricey. Items go on sale constantly and some businesses offer additional deals on top of sale prices. Try using a price-tracking website like keep.com, ShopTagr, or Amazon price tracker camelcamelcamel.com. There is nothing wrong with making big purchases, but make sure you’re getting the best deal. More importantly – be patient!
- Mistake: You’re being too cheap
Sometimes being stingy can hurt your finances because you’re cutting back on expenses where you might need to increase spending. For example, if you buy a used car that needs frequent servicing to fix all the problems you bought it with, you are probably spending more money than you should to repair and maintain it.
Solution: Figure out which expenses demand investment. You may need to reassess your budget if you’re struggling with how to properly allocate your money. It’s also key to remember to give yourself enough money to put in your savings account. Don’t be cheap with your savings, as it is just as important.
You need to be knowledgeable about your spending habits because making mistakes with your money could be risky for the future. It is your job to make sure you’re taking every action to save money and stay away from debt, but we all make mistakes and experience hard times. If you are struggling, don’t hesitate to contact our office and arrange a free consultation.