Nobody likes to waste money. It is hard to make enough money to pay for all of the needs of yourself and your family, so wasting money just means you will have to work that much harder to make ends meet. Therefore, avoiding basic money mistakes is something that you should always have near the top of your priority list.
After all, saving money is just as good as making money, so sidestepping the common mistakes on the list below should leave you in a better overall financial position.
Paying Unnecessary Interest
Sometimes, you can’t avoid paying interest. For example, the interest on your home mortgage is basically unavoidable. Most people don’t have the cash to simply buy a house without taking out a loan, so you aren’t going to be able to steer clear of interest charges in this case.
However, with something like a credit card, you should avoid paying interest at pretty much any cost. Using credit cards can be an effective financial tool, but not if you are spending hard earned money each month on interest. A simple way to get around this is to only use your credit card when you know where the money is going to come from.
Not Contributing to Retirement Account
If your employer offers a retirement account that they will match up to a certain contribution each month, you should absolutely take advantage of that opportunity. Contribution matching is basically free money, even if you don’t have access to that money right away.
Do your best to contribute the maximum matched amount from each paycheck so you can build a nice retirement account with some help from your employer. If you don’t have access to a 401(k) through your employer, find an online brokerage that meets your needs and start saving for retirement.
Paying for Bank Services
There is simply no need to pay for basic bank services like a checking account in this day and age. If you can’t find a bank to give you free checking, shop around or look for a local credit union that you can join. There are tons of options available today which will provide you with great banking services for free, so don’t waste any of your money on fees.
Switching banks is typically a quick and easy process, so don’t continue to pay extra charges just because you are too lazy to switch. Make sure not to count out online banks either, such as Discover Bank. If you have little need to go into a physical branch it can be a great way to get your banking needs met plus get a higher rate on your savings.
Out of Control Food Budget
Spending too much money on food is one of the fastest ways to blow through your monthly budget. At the end of the year, you just might be shocked to see how much money you actually spent on food – and how much of it was wasted.
Most people could improve their food spending in two ways. First, reduce the number of times you go out to eat. That doesn’t mean you can never go out to a restaurant, but try to cut back and save it for special occasions. Also, shop smarter so you have less food waste at home. Even just by using those two tips, you can slash your food spending and have more money left in the bank at the end of the month.
What are some other common money mistakes you see being made? What money mistakes have you been guilty of in the past? What mental tricks do you use to help you make better money decisions?
Photo courtesy of: Olichel