Let's face it, nobody is perfect and we all make mistakes. The idea, of course, is to learn from those mistakes so we keep ourselves from making the same ones over and over again. This philosophy works in so many areas of our lives, but interestingly, it doesn't tend to hold true with our finances.
For example, why do people continue to spend money with reckless abandon while lamenting the thought that retirement seems so far off in the distance? Are we murdering our chances at financial success because we just refuse to learn from our mistakes? We just might be.
Here are the top five money mistakes that most of us keep making:
Even if you know exactly how much you spent last month, do you know what you spent your money on? For example, how much of your money went towards food vs. clothing? How much did you spend on lunch with your co-workers vs. dinner with the family? Or are you dropping way too much cash on your relentlessly epic "date nights" with your significant other? Without detailed visibility into exactly where your money is going every month, it makes it tough to find where in your budget you might be overspending.
Source: Woman's Day
Our comfort zones are powerful things. Naturally, we all want to feel comfortable, but when that comfort comes at the expense of our well-being, then we are not doing ourselves any favors in our drive towards financial success. If you recognize a problem, actively take steps to fix it! If you're going out to lunch every day during your lunch break, make an effort to cut back. You don't have to quit "cold turkey," but find ways to incrementally improve your financial decisions. For instance, rather than quitting the lunch routine altogether, try only grabbing a bite to eat away from the office twice a week, for example, and take your lunch the other three days. Whatever you do, make changes. Keep the changes that work and reject those that don't.
Source: Carlos Reynaldo
Believe it or not, opportunities to level up our financial standing are all over the place. For example, many companies provide 401k matching contributions for their staff up to a certain percentage of their salary. In other words, when employees contribute to their company-sponsored 401k, the company will match it. This is literally free money, but yet, millions of Americans choose not to enroll in their company's retirement plan. Also, many credit cards offer rewards programs that provide yearly cash back or discounts on travel. Most will even provide insurance for rental cars that were paid for with that card. Almost all cards offer a basic level of protection against fraud as well. If you aren't sure what your credit card provides, do yourself a favor and take a look. You might be paying for things that your card already covers!
Source: Info Woolf
While homeownership might be right for some of us, in many cases it is not the wisest financial decision. The cost of ownership for a typical house is huge and more than many of us realize. From the mortgage interest to yearly property taxes, yard and home maintenance, repairs and renovations, owning your own home is much more expensive than what meets the eye. Unfortunately, there is a stigma attached to renting - as if the renter is somehow "less successful" because he or she rents instead of owns, which is entirely nonsensical. The fact is renting is far, far less expensive in many cases, especially if you tend to move around or don't have much interest in yard work or footing the bill for a new water heater when it breaks. Sometimes, utilities are included in the rent, which makes budgeting a much more simple process because monthly home expenses are more straightforward and consistent. While it may not be the right move for all of us, don't "buy" into the trap that home ownership is somehow "required" to keep up appearances of success, or that mortgage debt is somehow "good debt". It isn't.
Source: World of Wanderlust
There is great wisdom in "living in the present," but when it comes to our finances, our future is critically important! The "you only live once" excuse is often used to rationalize spending while we are young. The same reasoning can be used in support of saving your cash now to provide an avenue towards early retirement and truly taking full control over each and every day while you're still young. After all, life really is short, and the sooner that we aren't beholden to an employer for our livelihood, the sooner we can start to fully enjoy virtually all facets of our lives. After all, you only live once. Don't neglect your present self, but make an effort to prioritize your future happiness. Life becomes much more fun when we're able to make our own schedule and fully control our lives - yes, especially on weekdays!