5 Easy Money Mistakes To Avoid
Managing money is hard work and even the most financially savvy people make mistakes sometimes. Here are five money mistakes you can easily avoid.
No matter how much you earn, if you are spending more than you bring in, you are making a money mistake. Cutting back on your spending is easier than trying to make more money (mainly because you can control how much you spend, opposed to controlling how much you are paid). Giving yourself a spending limit is a solid strategy for making sure you don’t overspend. After all, you’ve worked hard for that money, why not use it for something you want? You’ve earned it. It’s all about moderation, if you can learn to be disciplined in your spending most other money related problems solutions will start to come easier.
2. Not budgeting
Sticking to a budget can be tough, but it’s an important method for keeping your financial life healthy and happy. Understanding where your money comes from and where it goes will you give you a pretty solid foundation for figuring out what things you can afford to cut back on, and what things you might not need to buy at all. The important thing to remember is that sticking to a budget takes time, if you struggle with it at first, don’t get discouraged, like most things it comes easier with practice.
But, what if I don’t even know where to start?
Well, you’re actually in luck. Fortunately for you, we live in a time period where there are service companies that will do most of the work for you, all you have to do is keep up with it. If you’re on of these people feel free to check out one of my favorite online budgeting services, I use this service myself, so trust me when I say it’s super easy to use. It’s call Budget Simple, like it’s name eludes to, it makes budgeting truly simple. It’s free to try, so check it out and see if works for you!
3. Not saving
Saving money has, and always will be important. All of these categories rely on saving money to some degree, without it, you can’t expect to live worry-free. The easiest way to get traction with your money saving habit is to start small. It’s much easier to justify putting $5-$10 away at first. The idea is that the more comfortable you get with putting potential spending money aside the easier it will get. Start small and put more away when you feel more comfortable, after all some is always better than none.
But, what if I have tried and tried and I just can’t do it? Is there anything out there that can do it for me?
This question might seem absurd, but I’m here to tell you it’s not, in fact the answer is yes, it’s called Digit. For those of you that aren’t familiar, Digit is an automated saving service that will literally save your money for you.
What?? They save my money for me?
Pretty cool I know. If your curious feel free to check out our previous newsletter featuring Digit, where we go a little more in-depth about how Digit works.
4. Thinking short term
One of the biggest money mistakes people make is they think of their money in the terms of the near future. You might often plan for next months expenses but find that’s the extent of your future planning. In some situations, this might leave you scrambling to figure out how you’re going to make ends meet later on when something unexpected happens (related to #5). It’s important to ask yourself “do I need this right now?” Or even “do I need it this week?” If you’re honest with yourself you might find that buying that new gadget isn’t as time sensitive as your brain is telling you it is. Putting every purchase through this thought process over time will help you identify the sneaky short term purchases that you really don’t need.
Another important thing to think about is your large future purchases that might tie up your expenses for a relatively long period of time like a car payment or mortgage payment. Preparing for these kind of expenses will only make it easier on your wallet. Start putting money aside for these expenses now even if you don’t have them yet, remember something is always better than nothing.
5. No emergency fund
Having an emergency fund is one of the smartest money moves you can make to prepare for the unexpected. The things that often hurt people’s financial livelihood are the unexpected expenses that come with life. Giving yourself a buffer will help ensure that when disaster strikes, you’ll be prepared. Again, remember that the easiest way to build your emergency fund is to build a habit of putting at least some money aside each paycheck. To repeat the theme, start with a small amount of money at first and increase it as you feel more comfortable. Something is always better than nothing.
Do you find yourself making any of these money mistakes and are struggling to figure out a way to overcome them? Leave a comment below, we love helping people figure out solutions to their money problems!