Managing your money is not easy. If you doubt that at all, just look at most of the countries in the world over the last several years. We’re not in a crisis just because things went wrong all of a sudden; this is the product of years of bad deals and financial sleight of hand that finally unraveled.
But just because it’s not easy (and for some reason most of our schools refuse to teach it), that doesn’t mean that we shouldn’t periodically look at our finances to see what we could be doing better. And believe me there’s always something. Even the most fiscally-minded of us find ways to mess up and waste money. Below are 10 of the most prevalent and destructive mistakes you can make.
10. Borrowing at high rates. Unless it’s an emergency and you are positive you can pay it off at the end of the month, you should never pay with a credit card. There are absolutely zero credit cards out there with “good” interest rates, and most of them have downright awful rates. This goes double for those “payday advance” places you see. Avoid at all costs.
9. Spending more than you earn. It doesn’t matter if you are living below the poverty line or making a million dollars a year, when more money is going out than coming in, you’re going to be in debt.
8. Not budgeting, or not knowing how to budget. If you don’t even know where your money is going each month, how can you be surprised when you end up overspending? Everyone, regardless of income, should make a budget and strive to stick to it.
7. Not saving. But it’s so hard, right? You barely make enough money to live as it is! While that may be true for a very small percentage of people, for most of us, it really isn’t. Budget (see above) and work out an automatic deduction from checking to savings each month. You’ll be surprised how little you miss the money.
6. Spending impulsively. A budget is great, but only if you follow it. Ideally, you want to try to build in a “miscellaneous” section that covers anything not specifically in the budget, but if this is $500, you can’t spend more than that over the month.
5. Eating out. A smart and relatively frugal couple can eat for an entire week by spending $50-$75 in groceries… which is probably what it would cost that same couple to eat out for one or two meals.
4. Buying new. While there are some things you probably do need new, most you don’t. Electronic equipment, furniture, cars – buying these used will save you a ton of money, and as long as you do your homework, you’ll find many in great condition.
3. Getting a bad credit score. Low scores can make it harder for you to do just about anything, from obtaining a loan to getting a job – yes, some workplaces do look at that when considering you as an applicant.
2. Not shopping around for deals. With the internet, there’s no excuse because you don’t have to go from store to store or wade through newspaper ads like you used to in order to get deals. Do a quick Google search for coupons or discounts whenever you need something.
1. Not haggling. Service providers (cable, internet, phone, etc.) fear losing your business more than they dislike giving you a discounted rate, but you have to be willing to haggle with them – even to the point of setting up an appointment for cancellation – to get the best deals.