We all have shortcomings when it comes to managing finances, but many of us aren't aware of them. Identifying the underlying money management mistakes you might be making can help you ditch less-effective financial habits and take control of your future.
Start by considering the following six common money mistakes to know what NOT to do with your money:
Do you spend money on things that don't matter to you? It's easier to make purchases that align with your priorities when you determine your life values and set financial goals. By uncovering what you cherish most, you will be better equipped to make wise financial decisions that align with your core values.
Let your financial paperwork, bills and statements pile up.
Make time to get organized. Stay on top of your finances so you are aware of important information about your accounts and know when payments are due. Actively managing your finances will help you avoid unnecessary late fees and additional interest charges.
Shortchange your savings.
Do save for short-term goals. Just make sure you save for long-term goals and emergencies as well. Having a savings plan in place will ensure you are covered in the event of a financial emergency, as well as allowing you to purchase that next big ticket item.
Waste money on interest by making minimum payments.
Try to pay even an extra $10 each month on your credit card balance. Try to find the extra money by reducing your grocery bill, changing to a cheaper cell phone provider or switching to a different cable carrier — apply the savings directly to your principal balance. Reducing your outstanding debt faster will put more money in your pocket in the future.
Procrastinate your financial responsibilities.
When life gets busy it’s easy to put off the tasks we want to do least. Take a lunch hour and tackle a financial goal, whether it’s reviewing your insurance policies or creating a will. Bonus points for opening a savings. Seeing one of your financial goals put into motion may give you the boost of confidence you need to move on to your next goal.
Put off your future.
Actively plan and manage your retirement. Even if it seems far away, begin to determine how you’ll pay yourself in your retirement years. If you are nearing retirement age or are currently in retirement, taking steps to understand items like when you should start making withdrawals from Social Security should take priority.
Acknowledging your past money mistakes now will enable you to recognize them — and replace them with better decisions — in the future. Over time you will see that these new financial habits become second nature.