Whether you’re 20 or 70, none of us are perfect when it comes to the financial department. No matter what age you are, making the same money mistakes over and over can cost you thousands and thousands of dollars that could go towards a comfortable retirement, your child’s college fund, or your dream once-in-a-lifetime trip.
To avoid making the most costly errors of your life, don’t make the following 5 financial mistakes.
- Robbing Peter to Pay Paul – It’s never a good idea to spend more money than you are currently making in your job. If you find that you are living beyond your means on a consistent basis, you will need to sit down and really assess where all of your hard earned money is going. At this time, you will need to cut many of the unneeded expenditures that you’re making as that money could go towards savings, your student loan debt, other types of debt payments such as title loans, or a down payment on a house. You don’t have to cut all of the fun stuff out of your budget. But consistently living above your means can get you in hot water later on down the line.
- Procrastination: Financial Edition – When it comes to our finances, many of us are guilty of procrastination. This is especially true when it comes to important items like 401Ks, disability insurance, or life insurance. If you have a family or will have one in the coming months, getting life insurance is an essential process. Disability insurance is also a must as many people rely on their paychecks to get from week to week. Apartment renters should get renter’s insurance as you never know what could happen. Being prepared in the present will pay off in the future.
- Using Credit Cards To Pay For Items You Should Be Buying With Cash – It’s easy to think that you’re getting away with something when you buy a $750 television with your credit card and pay only $35 on the next month’s bill. The truism that you shouldn’t buy anything with your credit card that you can’t pay for with cash is old, but it doesn’t make it any less true. If you must make a major purchase with credit, pay it off in full the next month.
- Not Being Honest When Making Your Budget – When you make your budget, you could create it through what you prefer to spend every month on bills, utilities, and entertainment. But to create an actual budget that you will stick to every month, you need to figure out what you actually spend. Making a budget on pie-in-the-sky figures will turn you into a budget buster before the first week is done.
- Buying Too Much Home For Your Budget – A lot of people learned this lesson the hard way during the last recession a few years back. Avoid this insidious trap by putting down a larger down payment, keeping up your credit score, and keeping an open mind about the whole home buying process.
We all make mistakes. The key to living a healthy, prosperous financial life is not making the same mistakes again and again. It is the mistakes we learn from that turn into hard-won lessons.