10 Stupid Money Mistakes
When it comes to mastering money management, we’re left to our own devices.
The subject is rarely offered in school and our parents are just as clueless as we are, so we figure it out on our own making several avoidable mistakes along the way.
The good news is, you’re not alone. Well, I’m not sure if that’s good news but hopefully it’s mildly comforting to know that making poor financial decisions is basically an American rite of passage at this point.
In this article we’re going to talk about common money mistakes so that you can be ready to avoid them.
- Buying a car you can’t really afford.
I know you want to ball out on your car but please resist the urge. If you don’t have any income producing assets then sit this one out. It’s ok!
The amount you spend on your car should not be as much as someone’s rent. Do your best to keep your car note under $250.
Remember, you still have car insurance and gas to think about. Don’t get got!
- Waiting too long to save.
Sure, you want to buy bundles, makeup, shoes, or just travel with friends. You deserve it. But I think you deserve financial freedom more.
If you take the time to do the math, you’ll see that the most important part of saving is getting started now. Every seven years that you delay cuts your retirement nest egg in half.
- Failing to take advantage of full matching in your 401(k).
Your employer may give you free money for your 401(k). It’s crazy not to take full advantage of this generous offer.
Get in the habit of saving by contributing to your 401(k) as soon as possible.
- Underestimating the value of a budget.
No one enjoys making and sticking to a budget. But honestly, it’s sexy! People who have their money together exude confidence. A budget keeps you grounded and on track.
You’ll spend more than you should, and save less, if you don’t have a sensible budget in place.
- Ignoring the importance of an emergency fund.
A single, unforeseen, financial mishap can derail the best of financial plans.
For most people, this will probably result from a major car repair or medical bill. Even with health insurance, the deductible can set you back thousands of dollars.
- Failing to realize that retirement isn’t that far away.
High school may have seemed endless, but you’ll be surprised by how quickly the next few decades go by.
Avoid being shortsighted. Start saving and preparing for the financial future you want.
- Underestimating the value of establishing and protecting your credit. Poor credit can be very expensive.
If you have bad credit you’ll pay more in interest on credit cards and any other type of loan including mortgages. It can even cost you a new job.
Avoiding credit cards altogether might be admirable, but it’s important to build your credit in some fashion. How will you ever purchase a car, home, or condo without any credit?
- Not calculating student loan payments before taking the loan.
DO THE MATH!! Art history is a wonderful field of study. But if you’re going to be stuck paying $650/month on your student loans at graduation time, it might not be the best option, or maybe study online and take some workshops.
Ensure that your eventual salary can cover your loan payments adequately.
You might find that you need a less expensive school or a better paying career path.
- Failing to have adequate insurance.
This happened to me when my apartment was broken into. My dumb ass didn’t have renters insurance. So don’t be like me in this regard.
Also, if you’re married or have children, life insurance becomes important, too.
- Accumulating unnecessary debt.
Debt can be such a burden. Most of us need to borrow money to purchase a car or home. But be smart about it!
Debt has a way of growing and creating sleepless nights. Do yourself a favor and avoid silly debt because it will ultimately steal from your savings and your future.