When it comes to financial decisions, we all make bad choices now and then throughout our lives. We spend too much which means we aren’t saving enough.
Unfortunately, making too many mistakes with money while we’re young can often lead to major economic problems later in life.
Thankfully, no matter where you are financially, there’s always room for improvement, especially if you can start learning from your own, and other people’s, mistakes.
So with that in mind, here are some of the worst financial decisions you can make.
4 Worst Money Mistakes You Can Make
1. Frivolous Spending
Number one with an absolute bullet has to be frivolous spending. In fact, this is more a series of constant mistakes which happen every month, and we lose fortunes when we waste a few dollars at a time.
It might not seem like too much of an issue paying for coffee, alcohol, or fast food, but it’s a huge waste considering we can have all of that stuff at home. When we spend too much on recreational things we don’t need, every little thing certainly adds up over the years.
Instead of wasting twenty bucks on this and fifty on that, consider establishing a budget so you can learn to save some of your income each month. If you can afford to save just $100 a week, you’d have over $5K by the end of the year!
2. No Emergency Fund
One thing that Covid-19 taught us all in 2020 is how important it is to have an emergency fund ready.
Having access to money from your back-up plan will protect you from any unplanned and expensive events that can occur at any time in life such as losing your job, unexpected medical bills, or needing to buy every toilet roll in Woolworths.
Or you know, all three at once caused by a global pandemic. Having access to some backup funds for situations like these will make them much easier to handle, without relying on high-interest loans or credit cards.
Just remember that the longer you wait to start saving, the longer it takes to have your emergency fund ready. So start spending less than you earn now, and then simply invest the difference wisely over a long period of time.
3. The Wrong Partner
Possibly unsurprisingly, there are two major financial problems that come from being in a long term relationship or marrying the wrong person. The first big mistake is being in a relationship with someone with bad financial habits.
That’s because it’s almost always extremely difficult if not impossible to accumulate any significant wealth together if one of you were terrible with money management.
The second major mistake that comes with choosing the wrong partner is you’re more likely to get divorced or separate. Either one is a major blow to the finances of any couple.
So before you rush off to marry in Vegas or decide to move in with that special someone, you should discuss your long term financial management plans as a couple. You should also talk about how you’ll handle the property settlement if you do split up.
4. Too Much Debt
While credit cards seem like an easy way to buy what you want, relying on them to finance everything will often become an incredibly expensive way of living your life.
Because when you don’t completely pay off the total at the end of each month, you’ll end up paying a much higher interest rate on the leftover balance.
Paying off your credit card debt can seem like it’s a never-ending story when the unpaid interest is constantly increasing.
Instead of racking up constant credit card debt all the time, you should be budgeting and consistently paying over the minimum amount each month so you can finally be free of credit card debt. Then start saving whatever you’re no longer paying on credit cards, so you can avoid going into debt by simply paying cash for whatever you want to buy.
Simply learning how to avoid these major money mistakes could become the secret to your financial success. Even if you’re already having financial problems.
Because once you are living within your means over the long-term, you certainly won’t be having anywhere near as many financial regrets.
- 5 Ways To Manage Your Money Wisely in 2021
- 10 Startup Survival Tips For 2021
- A Guide To The Pros & Cons Of Direct Deposits & Wire Transfers
Author: Luke Fitzpatrick