Common Money Mistakes
I have made a lot of mistakes. Forgetting to take the chicken out the freezer before my mom got home. Bringing home the wrong thing on the grocery list. Taking the wrong exit to my destination. Even if you want to admit it or not, we have all made mistakes throughout our life. But the thing about mistakes (in most instances) is that we can fix them, especially when it comes to money. Money mistakes can prevent us from living our best life, reaching financial freedom and even leaving wealth for future generations to come. Check out the four common money mistakes below so that you can either avoid or fix them.
Not Budgeting or Tracking Your Expenses
The “B” word, spending tracker, financial plan, forecast; whatever name you use, we all know we should at least be doing something. When you don’t do anything to track/budget, you’re basically telling your finances, “it is what it is.” Think of budgeting or tracking your expenses as a form of self-love. When you budget or track your expenses, you are taking back control of your finances instead of your finances controlling you. And trust me, you’ll sleep a lot better at night when you know your finances are in decent shape. Avoid this mistake by downloading an application to track your expenses or creating a simple budget to start.
Living Above Your Means
I think we can all admit (including myself) that we enjoy the finer things in life, including the latest cars, technology, and lavish vacations. When this lifestyle starts adding up and prevents you from properly saving or investing, it is safe to say you are living above your means. It can also be one of the quickest ways to get into a never-ending debt cycle. I don’t know about you, but I would rather be wealthy than just look wealthy.
Not Paying Yourself First
On pay days, I know a lot of us are making transfers to pay our rent, phone bill, or other financial obligations that we have. However, I believe we should all prioritize the act of saving before addressing our bills and discretionary spending. Consistent saving enables you to build wealth due to the compounding interest that your money will earn. Paying yourself first can be done in many ways, including contributing to your employer-sponsored retirement account, opting to send a percentage of your paycheck to a savings account, or even just automating your savings transfers to hold yourself accountable.
Not Maximizing Your Employer 401k Match
Question…do you like free money? One of the benefits that a lot of employers offer new hires is matching of their 401k contributions dollar-for-dollar to a certain percentage. According to Investopedia, the average matching contribution is roughly 4.3%. Some individuals do not know that their company offers a match to their 401k, or they are simply not maximizing their contribution efforts to reap the benefits. When you think long term, this benefit could add several thousand in your retirement account, depending on how long you’re at the company. For example, I received over $9,000 in 401k matching alone at my previous employer. By not taking advantage of this benefit, you’re missing out on free money!
During your next money meeting, take some time to put things in place to either avoid or fix these mistakes that could be impacting your finances. Let me know if there are any other money mistakes we can all try and avoid in the comments. Let's continue this conversation!
Holding You Accountable,