Are you tired of living paycheck to paycheck? Are you tired of being broke all the time? Who isn’t? But you may be broke forever if you keep making these financial mistakes.
Are you ready to take control of your finances and build wealth? If so, it’s time to examine your habits and make some changes. You might be surprised to learn that some of your bad money habits are actually keeping you broke.
In this article, we’ll look at 15 common financial mistakes you might be making that are keeping you poor.
15 financial mistakes that are keeping you broke
First of all, it’s never too late to get a hold of your finances and start making changes. At 62, I’m still learning how to correct my financial mistakes and save for my future.
It’s best to start early on some of these, obviously, and maybe teach your children and grandchildren some of these financial tips so they will be secure in their future.
Not Tracking Expenses
This is one of the biggest financial mistakes I was making. Not keeping track of where my money was going. $5 here and $3 there adds up really fast.
If you don’t know where your money is going, you can’t make a plan to save or invest it. Try to start and keep a daily tracking sheet so you can see.
Paying Full Price For Things
If you don’t have to, don’t. It’s totally okay to negotiate a better price for things like a car, paintings, appliances, furniture, etc. If you aren’t a good negotiator, bring someone who is great at it.
This is a great way to save hundreds of dollars on bigger purchases.
Too Many Monthly Subscriptions
You see the charges come from your bank account, but you don’t pay too much attention to them. $9.99 here, $14.99 there. Little things.
But all those little monthly subscription payments add up, too!
Go over your monthly subscriptions and see which ones you still need, which ones you use often, and which ones you barely use at all. It might surprise you.
I just ditched a bunch of monthly recurring fees in my business and saved myself a ton of money!
Fail to Budget
You need a budget. Everyone does. A budget is your roadmap to financial success and also a roadmap to help you avoid financial ruin and more financial mistakes down the road.
Without one, you’ll never know if you’re on track or off course, if you have enough money at the end of the month to pay bills. While budgeting isn’t exactly the most fun thing to do, it’s worth it!
Eating Out Often
That drive-through breakfast or Saturday dinner with friends adds up fast. Don’t go if you can’t afford it. Add up how much you spend on take-out food each month. The number may shock you.
That money can go to pay down that credit card or personal loan or maybe even put into a savings account. Why not host a potluck dinner party at your house once a month?
Not Saving For Emergencies
Unexpected expenses can derail your finances if you don’t have a cushion to fall back on. Even saving $50 a month can help a lot! Whether you have $5 extra or $100, it’s important to tuck it away for a rainy day.
You never know when tragedy will strike (I hope it doesn’t) your family, home, or work. It’s important to have backup money.
Living Off Your Credit Cards
This is also one of the worst financial mistakes that way too many people make. Credit card debt can quickly spiral out of control and keep you in a cycle of debt. Most credit cards have absolutely ridiculous interest rates and fees.
If you don’t make a plan to pay them off, you’ll never get off of the credit card roller coaster of debt. Try to pay more than your minimum monthly payment each month, and when extra money comes in, sock it onto your CC.
Living Beyond Your Means
We all want to be like the Jones’. Bigger houses, nicer cars, more things.
The problem with this (well, honestly, there are many problems with living this lifestyle) is that you can’t afford it, and you’re just competing with your neighbor and pretending to be someone you’re not.
Stay within your means and stop trying to prove anything to anyone.
Not Aggressively Paying Down Debt
High-interest debt can eat away at your finances. Make a plan to pay off your debt as quickly as possible. Whether it be your credit card, car loan, or mortgage, if you have extra money, put it on your debt with the highest balance and interest rate.
Most debts have very high interest rates and even yearly fees. That’s money that can be put towards savings or a vacation!
Sticking to One Job
There are many ways to earn extra income, from side hustles to freelance work. Don’t rely solely on your main job to support your finances.
Did you know that there are literally millions of people earning money online doing simple work?
If you have an extra 5-10 hours a week, try to find a small part-time job to help with bills and savings.
Ignoring Your Credit Score
Your credit score affects your ability to get loans, credit cards, and apartments. Make sure you’re paying your bills on time and keeping your credit card balances low.
If you’re not sure what your credit score is or how to find it, there are free services online, or you can make an appointment with a credit counselor to talk about it.
Not Investing In Yourself
You are your number one asset, and it’s important to invest in yourself as well. Your education and skills are valuable assets. Invest in yourself by taking courses, attending conferences, and networking.
This is how and where you will make great connections and open doors for opportunities.
Buying Unnecessary Things
Do you really need that new gadget or designer handbag? Choose experiences over things and say no to unnecessary expenses.
These little luxuries can add up fast. While it’s ok to treat yourself every now and then, it’s just as important to make sure you’re not buying things uncontrollably. If you are an emotional spender, maybe talk to someone about that who can help you.
Automate Your Finances
Automating your savings, bills, and investments can save you time and prevent you from overspending. If you keep all your payments set up on autopilot and know exactly when they come out (reminders on Google Calendar are good for this).
Then you’ll know you don’t have an extra $20 today for something you don’t need anyway.
Not Preparing For Retirement
It doesn’t matter how old or young you are; start now.
$5, $10, or $500, however much you have extra to put away, start putting it away today. It’s never too early to start planning for retirement. Take advantage of retirement accounts like IRAs and 401(k)s.
final thoughts
Stopping these financial mistakes won’t happen overnight, but it’s essential to achieving financial freedom. Identify which habits you need to break and take action. Whether it’s tracking your expenses or negotiating bills, every step you take will bring you closer to financial success.
Remember, small changes make a big difference.
