The 3 dumbest money mistakes you can ever make

by Kristina on October 7, 2013 · 7 comments

Good morning Dinks.  So often we read about all the great things that people do with their money to save it, grow it and keep it safe.  But what about all the bad things that people do to lose their money, not invest it wisely and just plain waste their money? I for one love reading more about peoples mistakes than their glories, although sometimes I am a sucker for a good success story.

You know the saying “Learn from my mistakes”, well that’s exactly how I learned about how to manage money.  As a teenager and young adult I had no idea how to manage money and I made a ton of mistakes like overspending on clothes and dining out, applying for several credit cards that I couldn’t afford and making only the minimum monthly payments on all of my credit cards.

I like to know what not what to do with money as oppose to knowing exactly what to do because I feel if I know what not to do everything else will work itself out.

So here we are, these are 3 dumb money mistakes that I see people make every day

1. Counting on money that you are hoping for but don’t have.  People do this a lot with their tax return refund.  They hope for the best situation, aka a big tax refund, and make plans for the money before they even know if or how much money they are going to receive.   The problem with having expectations for money is that you are fixated on what you want to buy with the money and if it turns out that you aren’t getting a tax refund you spend the money anyways…usually on a credit card because you don’t actually have the money.  This is a problem.

2. Don’t spend money on your credit card and hope to pay it off later.   This was my personal motto in my early 20s.  Every single time I wanted to buy something but didn’t have the money I would tell myself “It’s OK I will charge it now and worry about paying it later.” That is a really bad financial habit, actually it’s probably the worst financial habit you can have.  What usually ends up happening is that you keep spending money and don’t have the income to pay it off.  Definitely a bad financial habit.

3. Don’t keep cash in your wallet.  I could leave my house at 8:30 am with $20 in my wallet and by noon it will be gone.  Breakfast, a snack, some gum and a coffee later all of my money is gone.  It’s easy to spend money when we have cash on hand; so don’t keep cash on hand.  Spending money can quickly add up when we say “Oh it’s no big deal if I spend $4 on coffee and it’s nothing if I spend $5 on breakfast”, but if we do that three times it can quickly add up and our $20 is suddenly gone…and then some.

What is your dumbest money mistake?

Photo by jaaron

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{ 6 comments… read them below or add one }

1 Michelle October 7, 2013 at 11:36 am

So many people count on money that they do not have. That can really ruin a budget, and it can be really disappointing if the money falls through.

2 James October 7, 2013 at 11:10 pm

At one point like 15 years ago, I bought gym membership and didn’t fulfill all the terms of the contract. Big mistake. It cost me dearly in terms of my credit score.

3 Crystal October 8, 2013 at 12:27 am

One of my friends is planning her retirement based on the life insurance payout from her dad eventually dying. I feel like an IRA/ Roth IRA/Stocks/Rental Home would be a little less creepy and maybe act as a backup in case she doesn’t get what she thinks she’s going to get…

4 Kali @CommonSenseMillennial October 8, 2013 at 9:05 am

I agree with 1 and 2, but I have to disagree with 3 – I think keeping a bit of cash on hand is a good idea, because you never know when the only option you’ll have is to pay with cash. Being disciplined enough not to spend every $20 you hold in your hand is an important skill to learn, anyway!

5 dojo October 8, 2013 at 12:05 pm

I think no.1 is something we all did and it bit us. We are always over-optimistic and this doesn’t work out well in most cases.

6 Kyle | October 10, 2013 at 5:18 pm

Easy. Back in 2003 I just had to have a new truck. Bought a 2500 Silverado (because I wanted the standard 4-door) for 40k when I could have waited a year until they made the Silverado 1500 with 4 doors and saved close to 15k and gotten a truck that got better gas mileage – STUPID and impatient!

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