When it comes to getting your finances on track, there are a ton of things that could sabotage your success. And sometimes your biggest problem could be you. Gaining control of your money takes sacrifice, a plan, and a budget. Mistakes happen, but some can really hurt your money situation. If you are working on better managing your money and being successful with your finances, make sure you aren’t committing these financial mistakes.
Are you making these financial mistakes?
Not creating a budget. Dave Ramsey says “a budget is telling your money where to go instead of wondering where it went.” And he is so right. If you don’t have a budget, it will be hard to keep track of your spending and make sure that you paid all of the bills you need to pay each week.
Not having an emergency fund. When something goes wrong (and it will) and you don’t have any money set aside to pay for unexpected costs, you’re going to resort to using your credit cards. An emergency fund is imperative to becoming debt free and being successful with your finances.
Not having a goal in mind. If you don’t have a financial goal, you won’t know what you need to do to get there. Are you looking to save for an emergency? Do you dream of breaking free from debt? Are you saving for a downpayment on a home? Find out what you want to do, write it out, and make a plan.
Continuing to use your credit cards. You want to be working toward getting down to zero debt. You’ll never get there if you keep charging your credit card and adding to that debt. Once you decide you want to tackle your debt, cut the cards up – or hide them.
Keeping yourself in the dark. Not knowing how much you owe and who you owe can get you into trouble. You’ll need to know what debts you have so you can plan your budget accordingly. If you’re married – or getting married – make sure you know about your significant other’s financial situation. You’re a team now, so you’ll have to tackle both of your debts, together.
Not focusing on paying off debt. People always wonder if they should save first or pay off debt (some don’t even think about paying off their debt). I follow Dave Ramsey’s steps – save $1,000 in an emergency fund, then focus on paying off debt, After debt is paid off, then save the rest of an emergency fund, then retirement and kids college funds, etc etc. Debt is crippling. Think of how much you are paying just to debt each month. Between car payments, student loans, credit card bills, and the mortgage – a huge portion of your check is going to debt. Imagine having that extra money to save, invest, or spend. That is a ton of money! And the faster you pay off your debt, the faster you will have that money.
Thinking your paycheck is enough. If you have time to spare, why not use it to make extra money? There are a number of ways to make extra money – from website testing and taking surveys to selling stuff online, driving for Uber, or freelance writing.
Not taking advantage of your work’s benefits. One way to make extra money is with your job’s benefits. One year, I made an extra $2,607 from my job just by doing the research and taking advantage of all of the benefits my job had to offer. That included participating in health incentives and challenges, taking the bus to work, and using company discounts at other businesses. Do your research, talk to an HR rep and see what you can find to take advantage of.
What mistakes have you made on your way to financial freedom?