9 Money Mistakes You Should Be Avoiding
Ever wonder if you’re making the right choices with your money?
Everyone’s financial situation is different, so there’s no one-size-fits-all answer to offer. However, there are definitely a few mistakes that can really derail anyone’s financial plan, no matter how much money they make. We’ve compiled nine that you should be mindful of avoiding if you can!
1. Trying to maintain appearances
If you find yourself trying to keep up with those around you to your own financial detriment, you should recognize this as a major money mistake. It’s natural to seek out material comfort, and particularly so if you see your close friends and family enjoying the finer things in life. But, if you can’t actually afford them yourself and you’re still trying to keep up, you’re inevitably headed towards a financial crisis.
Remind yourself not to compare what you have to what others have. It’s simply a road that leads to unhappiness and high credit card bills!
2. Not preparing for emergencies
No matter who you are, you can bet that you’ll face a financial emergency, like a major car repair, sometime in the future. It might be tomorrow or a year from now, but it’s inevitable that you’re eventually going to face a major, unplanned expense. If you’re not prepared to absorb the financial shock that comes along with an emergency, you may end up in serious debt as you try to recover.
Instead, think ahead and build yourself an emergency fund! This is something we advocate for regularly, but it’s importance really can’t be overstated. Having a pool of money to pull from, meant only for emergencies, means you’ll be able to move on from an unexpected expense without it upending your life.
💡 You can easily start building an emergency fund for yourself by joining a QUBER 1K Saving Challenge, where we’ll challenge you to save $1000 over 52 weeks. The total you’ll save will serve as a great starting point for an emergency fund (or as a supplement to one you’ve already started). If you’re interested in getting started, click here.
3. Spending when you’re emotional
You may not even realize you’re an emotional spender, but think about one of the telltale signs: do you feel you deserve to “treat yourself” when something good happens, or use shopping as a remedy for when something bad happens to you? If so, you may be letting your emotional state guide your spending decisions. The problem is that our emotions are always changing, meaning there’s constantly going to be new situations where you can justify excessive spending.
Instead, learn to recognize if you make poor choices when you’re feeling strong emotions and figure out how you can best divert your attention before you spend. This may include strategies like deleting food delivery apps from your phone, waiting 24 hours before making a purchase or taking up a practice like meditation to help re-focus your mind before making decisions.
4. Ignoring financial literacy
Unfortunately, financial literacy still isn’t given enough attention in school curriculums in our country, so the responsibility to learn about money management falls on the individual. That means, even if you’re not totally interested in personal finance, it’s a huge mistake to ignore getting educated about it!
There are plenty of great resources you can pull from, many of them free, that’ll help inform you about various aspects of personal financial management. You don’t need to become a personal finance expert, but understanding the basics will help you make well-rounded decisions with your money and give you a greater sense of confidence when it’s time to make big choices.
5. Not saving right when you get paid
We’re all guilty of assuming that we’ll save what we have leftover in our bank account just before pay day. Herein lies the mistake: most people have nothing left over once their pay period is done!
Instead, saving what you can right after you get paid and moving it out of your main bank account will help you grow your savings and keep that money saved for longer. You’ll still be able to access it if you need a bit of extra money before pay day, but if that money isn’t immediately available to you, it’s much easier to leave it untouched.
💡 This is another area where saving with QUBER can really help! Moving your savings to The QUBER Vault right when you get paid will put that money just out of arm’s reach, meaning you’ll be much less likely to pull from it unless you really need to. You can easily set Saving Rules that move a set amount of money or a percentage of your payroll deposit every time you get paid and make the process a breeze. Click here to get yours set up!
6. Making big choices on a whim
When it comes to making major financial decisions, you should be putting a great deal of thought into your choices. If you instead find that you rush big choices or make them without considering all your options, see this for what it is: a mistake! For example, if you’re thinking about buying a house, it’s important to have a clear understanding of how much you can really afford when all the additional costs (like property taxes, homeowner’s insurance, furnishings, home repairs and so on) are factored in. Your monthly mortgage payment is far from the only thing to consider!
Instead, take your time with big decisions and gather as much information as you can before making any formal commitments. Even if you can’t afford professional financial advice, you can ask friends and family members who’ve made similar choices for their opinions, use free resources available to you through the Internet or inquire with counselling services or local non-profits to see if you can access free or cheap financial advice.
7. Getting behind on payments
This is a no-brainer: getting behind on payments on your credit card, loans or other debts if you can avoid it is a huge mistake. Sure, no one wants to devote the bulk of their paycheck to paying off debt, but racking up interest fees and late charges will simply put you further in the hole. So, whenever possible, do yourself a favour and pay your bills on time!
8. Fearing the world of investing
Even if you’ve got a ton of money in your savings account, it’ll slowly lose value over time due to inflation. Instead, taking your savings and investing them can help cancel out the effect of inflation and earn you extra profits.
It can be a confusing world to a beginner, and again, it’s one to be entered into heeding the warnings above - you’ll want to have a robust emergency fund before you start and it’s important to make choices that are based in fact instead of on whims or emotions. But, if you want to grow your wealth, you’ve got to dip your toe in the pool of investing! Use the resources available to you to learn what you need to and get started.
9. Not setting any goals
Finally, trying to manage your finances without any clear goals is one of the biggest money mistakes you can make! Short-term gratification is tough to say no to sometimes, and giving in to the temptation to spend regularly can really throw you off track when it comes to gaining long-term financial stability.
Instead, having a clear goal (whether that be home ownership, retirement, a vacation or simply to prepare for an emergency) is an essential part of any strong financial plan. Only you can really motivate yourself to make smart financial decisions, and it’s a million times easier to do so if you can remind yourself of the long-term outcome you really want to achieve.