Being an adult is hard work. Being an adult without making money mistakes is even harder work, especially if you are just starting out as a young adult working on your career and learning how to handle financial responsibilities. We’ve all made some mistakes along the ways, and you are likely to make money mistakes at some point too. The goal isn’t perfection, the goal is to make as few money mistakes as possible so you have a shot at financial success.
Here are five common money mistakes and how to avoid them.
1. Focusing on Wants Instead of Needs
We all have them. Those wants can scream loudly in our ears, especially when we see other people around us enjoying the things we would like to have. Indulging your wants isn’t always a bad thing, but indulging them too frequently can wreak havoc on your budget and financial goals. Impulse spending is particularly damaging to the larger financial picture. Make it a practice to carefully evaluate the things you purchase and decide if that item is truly something that you need. If it isn’t, it’s time to decide if that purchase is important enough to sacrifice your financial goals for. A new designer handbag or pricey sneakers might make you feel good for a few days, but is it worth postponing your goal of a long overdue family vacation or a needed home repair?
2. Overpaying for Merchandise
When you are leading a busy life, you are less likely to compare prices or spend hours looking for the best deals online or in brick and mortar stores. It’s important to realize, however, that the first deal you see may not be the best deal. The same item might be offered at widely varying price points depending on who is selling it. If you are purchasing items at a local retail store, do some quick research to find out what other retailers are selling that item for. It’s common practice these days for stores to offer price-matching guarantees. When purchasing online, you can use browser extensions and apps such as Honey, Ibotta, Retailmenot or Ebates to find the best prices. Before you complete your online purchase, always look for coupon codes to make sure your online purchases are as cost-effective as possible. A simple browser search of “Vendor Name + Coupon Code” can give you options to check. It’s not unusual to find coupon codes that offer free shipping or a percentage off of your purchase.
3. Opting for Money Instead of Career Growth
Yes, you need to pay your student loans and keep up with your bills. Most of us understand this struggle. However, a lot of adults, especially when they are starting out in their career, take positions or job offers with better salaries versus jobs that provide growth. Jobs that offer growth are remarkable learning opportunities that open the doors for you to build your work experience and ultimately end up with a larger salary than you initially set out to make. Consider the big picture when weighing career options.
4. Not Using a Budget System
Learning to manage your money like a pro takes time and practice. You aren’t going to know everything right off the bat. Having a budget can go a long way towards ensuring your success. Without one, you are unlikely to have a clear picture of where your money goes each month. If you aren’t using a budget, it becomes much easier to overspend because you aren’t keeping track of the categories that you spend in or the amount you are spending in those categories. Innocent purchases can add up quickly and hit your wallet hard. Do yourself a favor and find a budgeting system that works for you.
5. Overusing Credit Cards
You’ve probably already heard this one, but it is worth repeating. Treating your credit card as if it was a short-term loan can get dangerous quickly. If you don’t budget or spend carefully, this is doubly true. It’s common for people to misunderstand the fine print on their credit card agreements, and it is easy to rack up a large credit card balance in a short amount of time if you aren’t paying close attention. Minimum payments aren’t enough to dig out of debt and can add up to a large chunk of money if you use multiple cards. The best thing you can do is use your credit card sparingly. If you don’t have the money for your purchase in your bank account, don’t purchase it until you do have the funds to cover it. Credit cards can be used wisely to help cover emergencies or establish good credit, but careless use can cause a lot of financial pressure to mount. Don’t fall for the trap of treating credit cards like free money in your budget.
Consumer Education Services, Inc. (CESI) is a non-profit committed to empowering and inspiring consumers nationwide to make wise financial decisions and live debt free. Speak with a certified counselor for a free debt analysis today.
