How to Be Good With Money: 5 Common Money Mistakes to Avoid
My name is Maria, and I will be talking about some money mistakes to avoid. I am interested in all things related to minimalism, finance, frugal living, and how to be good with money in general.
Handling money responsibly is something that we should all learn more about. I know that it's something that I'm still continuing to strive for.
1. Not having a budget
One of the most common financial mistakes is not having a budget. Now, I know budgeting is something that some people may think is tedious and many don't even really know where to start. However, you need to try to push yourself to create a budget, because that's a plan for how your money is moving and how you're spending your money.
Try to set up a budget. List out all of the items that you need. From rent, if you have a mortgage, utilities, food, and transportation, try to list all of those items so that you know where your money is going.
2. Wasteful spending
Another common financial mistake is frivolous spending. I know when I was still back in university, living in Toronto, I would just go to Forever 21, H&M, and other fast fashion stores during breaks in between my classes, and just spend time there and spend money unnecessarily just because I was bored.
If you're using that time to shop around because of boredom, try to think of something that you could do more productively, such as actual studying, or even something that you're passionate about.
You could even use that time to work a part-time job. If there's time
in between, just try to avoid wasteful spending.
3. Not investing in retirement
Another financial mistake is not investing in retirement. If you're not already investing in your retirement, what are you doing to save when you’re older and possibly unable to work?
Try to invest money, even if it's $10 or $50 a month, and try to put your money towards investments so that money can work for you. I know that investing is something that might seem overwhelming, but try to look into it.
There are a lot of brokerages online nowadays that you could look into having monthly contributions. It will end up snowballing and getting bigger if you put those into investments. You could start somewhere simple, such as investing in index funds and ETFs, which is primarily what I do.
You could also look into going more on the mutual fund route through a bank. Just keep in mind some of the charges that will be incurred. It's a little bit higher compared to if you just go through an index fund or ETF route. But please try to start investing in your retirement.
The younger you are, the more benefits it will have for you. I didn't even really start investing until I was about 25. I wish I had started sooner so that I could see the growth that it would have made in my overall portfolio. So please try to invest the money as soon as you can.
4. Buying without researching
Another financial mistake is rushing to buy things too fast. Take a moment and do your research. If you're going to be going on a vacation, don't just purchase a plane ticket on a whim.
Look around different websites to see what's the best deal out there. If you're going to be purchasing something that is a little bit more expensive, whether it's a phone or a camera or something more on the pricier end of things, try to look up reviews and don't just purchase it on a whim.
Think about it. Sleep on it. I know personally that I have wanted to own an espresso machine. I have been reading reviews and watching YouTube videos on the quality of the Nespresso over the K-Cups, which my husband and I already own.
Instead of buying something that is completely brand new, I looked online on Facebook Marketplace and found an espresso machine for $40, which already contained the milk frother. So try to look online and see if there's anything that you could purchase used, and if there isn't, just sleep on it for a little bit and read reviews just to make sure that it's going to be worth it in the end.
5. Not having a plan
Another financial mistake is not even having a plan. Make a plan of where you want to go financially six months from now, a year from now.
Is there anything that you are working towards, like a vacation? I know personally my husband and I planned to save some money for a down payment toward a house. We created a plan and made a budget So that we knew where our money was going. Part of it was towards the emergency fund and part of it was towards the down payment for the house.
We knew where each dollar was going, any extra dollars that we got, whether it was a pay raise or if my husband worked overtime, then we knew where that money would go.
Just have a plan of where you want to be financially a few months down the road to a few years from now.
Common money mistakes
Those are the common money mistakes most people make. Make changes all at once or a little at a time and you’ll be on solid financial ground in no time. From making a budget to creating a plan, you can learn how to be good with money painlessly.
Share in the comments below your advice for avoiding money mistakes. I love to hear from you!
Liz on Oct 15, 2022
Always think of a less expensive way to do what you love rather than deprive yourself. For example, I watched a frugal friend when she goes out to lunch with the girls to see what she did. She ordered an appetizer rather than a full dinner (even salads cost more than a lot of appetizers) and drank ice water. She had a great time chatting with us, but got out of the restaurant spending much less money. I do what I saw her do now! Also - learn to speak up for yourself. When anyone says at lunch "Let's just split the check," I notice it's usually the big spenders who make that suggestion - several drinks, expensive entree, etc. Now I speak up and say, "Actually I prefer to have my own check as my husband and I are saving for some very specific goals." No one has to know what those are - but don't let the pressure of the crowd end up spending your money for you. I also suggest going for coffee or coffee and desert rather than for a full meal. If friends pressure you to spend more than you want to, they're not really friends. Watching your money is part of being an adult and not an impulsive teenager!