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Budget

Stop Making These Common Money Mistakes


Tired of falling into the same pattern of bad behavior when it comes to your finances? Money is one of the biggest stresses in our lives, and it’s not something that we even talk openly about. Some might even say that our general aversion to talking about finances in public has made us afraid to ask for advice or to share financial tips with one another.

If you’re tired of running into the same issues month after month, then congratulations on identifying the need to solve a problem. Even if you’re not sure where to start or how to break bad money habits and grow good ones, there are improvements you can make to your spending, saving, and financial record-keeping. Read on.

Assess the Situation

You can start by stepping back and going over your bank statements, or have an app categorize them for you. Divide them up into sections such as fast food, bank fees, bills, etc. When you actually take a look at what you spend and have an actual dollar amount on things, it will open your eyes. After you have seen where you spend your money, it would be best to set a budget.

Make a Budget and Stop Overspending

To set a budget, you need to compare how much you are spending and how much you actually make. Set money aside to take care of yourself and your well-being first. This will include expenses like your bills (food, utilities, rent) and putting money aside in a retirement fund. From there make sure you give yourself an allowance because, well, living frugally isn’t necessarily a whole lot of fun.

Some Common Money Mistakes

What will it really take for you to feel comfortable with your finances? Maybe you have some long-term goals of retirement, or maybe you measure your financial health based on how you’re doing in the moment. Not sure how to identify bad money habits? Take a look at the following list. Are these behaviors negatively impacting your bank account? If so, it’s time for a change.

  • You prefer to buy a meal instead of preparing it
  • You don’t make a repayment plan before taking out a loan
  • You don’t think you need to have a budget
  • You haven’t paid attention to your credit score
  • You buy items based on the price and not the actual item
  • You spend more than you make
  • You don’t have a savings account for emergencies
  • You go grocery shopping when you’re hungry
  • You enjoy frequent shopping for retail therapy
  • You don’t maintain an allowance for fun spending
  • You don’t define the difference between want vs. need
  • You’d consider going into debt for a wedding
  • You want to get a larger house and mortgage than you need
  • You’re not saving for retirement
  • You replace things that aren’t broken

What Is Your Debt to Income Ratio?

After you have set some money aside for your health and wellbeing, your “fun funds” (money for entertainment), and your savings, you need to make sure that you are thinking about your debt to income ratio.

Take a look at all what you owe everyone and how much time and money it will take to pay them back. A majority of these expenses are going to be credit card companies and student/bank loans. The sooner you pay it off the better it will look in your bank account and also on your credit report.

Don’t forget that credit isn’t something that affects you, it affects everyone. So, don’t cancel all your credit cards once you pay them off, keep them open. An open line of unused credit looks good if you are looking to buy a house or a car in the near future. Saving for the down payment and the interest will be a lot better.

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Erin Thompson

Erin Thompson spent years managing her own blog about budgeting and debt. Because of that, she has great insights not only about managing spending and borrowing but also about running websites profitably. When she's not writing articles for us, she's traveling and looking for new types of wines to try.
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The content on Cashblog.com is for informational and educational purposes only. It is not financial advice and we are not certified financial advisors. Cashblog.com strives to keep its information accurate and up to date, but it may differ from actual numbers. We may have financial relationships with companies listed on our site. We may receive compensation for the placement of sponsored products or services. We work hard to write authentic and accurate articles.