No one comes into this life with a complete understanding of how to manage their finances. This is why, despite our best intentions, we end up making several money mistakes. When you are not careful, you can let those mistakes balloon into something that can ruin your financial standing. In order to provide a rather stern reality check, we’re going to talk about five common money mistakes we’ve come across in the last few years.
Letting FOMO Get Out of Hand
The term “FOMO” is something that is relatively new but the concept it discusses is quite old. The term that is used to refer to “the fear of missing out” is a very common money mistake. Several decades ago, this was referred to as “Keeping up with the Joneses”. Everyone’s financial situation is different. There are those that are seemingly blessed with a lifestyle and spending capacity that we wish we had.
When you let FOMO get out of hand, you end up spending more than you should—simply because you did not want to be left out.
Not Having Any Savings
The word ‘savings’ is often mentioned and it often part of New Year’s resolution but many fail to follow through on it. Savings are not just about having a tidy sum set aside so you can supplement it toward a more expensive purchase.
Savings is all about having an amount of money that is totally out of your reach and is just maturing through interest rates. This is what will help you later on in your life.
When you go into a mall and fine that they have an ongoing sale, it can get pretty tempting. However, you have to remember that you did not actually save 20 or 30% off the original price. You still paid 70 to 80 percent of what it is worth. So you still end up spending when you should be saving.
Not Having a Budget
Having a budget is one of the best ways to safeguard your finances. It serves as a good way to have clear guidelines and restrictions on what you should do with your money. The trouble is, not a lot of people make use of a budget.
Prioritizing Going Out versus Staying In
Going out whether for leisure or anything else is one of life’s pleasures. However, like everything, there needs to be balance. If you, like so many others, prioritize going out rather than staying in, chances are you end up spending more than you should. It always costs money to pay for gas and outside entertainment. Eating outside can cost you quite a bit—especially if you do it all the time.
The mistakes posted above are easy to avoid. So if you look at the things above and realize that you are guilty, it is high time to clean up your act. Always remember that earning money can be a finite thing—especially since you will not always be fit to work.
What other common money mistakes have you seen?