We all make some of the dumbest money mistakes at some point in our life. From spending money on useless things, buying clothes we won’t even wear, from spending more than we make to racking up credit card debts, we make the stupidest money mistakes. After all we are all humans.
But if we learn from these mistakes and know about these money mistakes, we are less likely to repeat them or make them.
That is why I have compiled eight of the dumbest money mistakes people make all the time and how you can fix or avoid them.
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1. Having no or inadequate emergency funds.
As the name suggests, Emergency funds are designed to help you when there is in fact a financial emergency. You could lose your job and need money to pay your rent; your car might need a newer engine; or you might have a large health bill.
Without an emergency fund, you might wind up deeply in debt.
To fix this, put at least six months worth of living expenses in a high-yield online savings account. Today’s best saving accounts will earn you more interests on your money than what a typical traditional savings account will give you. The savings accounts calculator will tell you how your savings will grow over time.
2. Having too many accounts.
Another dumbest money mistakes people make about money is that they have too many accounts.
If you have several bank accounts, mutual funds, brokerage accounts, you might be spending a lot of money on fees. You might also find it difficult to keep track of things.
To fix this, consolidate your bank accounts to one checking account, have a high-yield online savings account, and one brokerage account.
3. Failing to take advantage of your employer’s 401(k) plan.
This is the dumbest money mistakes of all: missing out on your employer 401(k). If your employer offers a 401(k) plan, it would be dumb not to enroll in one. Any tax deferred account is a good deal when it comes to building wealth. And your employer 401(k) is the best of all, especially if your employer matches your contribution.
To fix this money mistake, go talk to the HR department at your work and enroll, because you might be losing money.
4. Failing to set financial goals.
It’s hard to imagine how you’re going to be financially independent if you don’t set any financial goals. Some people spend more time planning their vacation than they do planning they financial future. And they wonder why they are always broke and live paycheck to paycheck.
To fix this, think for a moment and write down some specific financial goals – whether large or small, short or long-term – for the future and make a plan to achieve them.
5. Failing to track day-to-day spending
If you don’t know where your money is going day to day, you’re probably spending too much. And you need to track your spending.
Failing to track where your cash is going is what gets you into trouble. It’s easy to lose track of $3.5 on a caffe latte, or $5.50 on a a Uber pool ride. These everyday little things end up costing more over time.
To fix this money mistake, do a spending diary to find our where your money is going each day.
6. Failing to do a budget.
One of the best ways to take control of your finances is to do a budget.
A budget is simple tool that help you understand the money going in and the money going out each month. But most people ignore this simple tool.
A budget shows if you are spending more or less than you can afford.
To fix this, learn how to create a budget by reading this: How To Create a Budget And Learn How to Stick With It.
7. Failing to diversify.
It can be tempting to put all your money in one place, because it is convenient and easy. For example, you might put all your money into stocks. But this is the wrong approach, because in this example, the stock market might go down and therefore, you can lose all of your money.
To fix this money mistake, divide your assets among high yield online savings accounts, real estate, bonds, money market funds, etc.
8. Ashamed to invest small amounts.
One of the worst excuses I hear from people all the time is that they don’t have much to invest or to save. With this attitude, they will never save or invest anything. To me not saving anything at all and living paycheck to paycheck, is just being irresponsible.
To fix this, start saving something from your paycheck. It can be as small as $10. The amount is not important. What is important is for you to get into the habit of savings.
The idea is to begin with something small. And as you get into the habit of saving, you can increase the amount to $20, $50, $100 and so on.
What are some of the dumbest money mistakes you or people you know make all the time? Do you agree or not? Share your thoughts in the comments below.
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Original article and pictures take www.growthrapidly.com site
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