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August 26, 2021

Five Common Money Mistakes (and How to Fix Them)

How to better your money management skills.

Whether you’ve just started managing your money or you’ve been doing this for a while, here are some money mistakes you could be making. Some mistakes are an easy fix while some others will take more time and work. Here are five common money mistakes you might be making and how to fix them.

Trying to keep up with friends

Even as an adult, you can feel the pressures of trying to match the lifestyles of the people around you. When you try to spend as much as your friends do and you don’t make the same amount or are different stages in life, it’s a guaranteed method to financial self-destruction. You can fix this by learning to just accept that everyone’s life is different. You can take control of your life instead of relying on others to dictate how you spend your money. Create a budget that fits your life instead of someone else’s life.

Buying a new car

This might not be something you necessarily agree with; buying a new car is not the smartest idea. You usually have to take out a loan to afford one and the worth of the car depreciates the second you’re off the dealership lot. Besides that, insurance and registration tend to cost more for newer cars than older cars. You can avoid spending that much money by buying a used car. Cars tend to have a good lifespan so you can easily find and afford an older model that still works well. You will spend less even if you have to put some work into it.

Not taking advantage of free money

Free money comes in many different forms. Some employers offer a 401(k) match plan.. If you’ve been ignoring your employer’s 401(k) match, you are losing out on free money. Some banks also give you free interest for opening and using their savings and checking accounts. To take full advantage of these, you should sign up for your 401(k) match and research any banks that offer good interest on their accounts.

Living without savings

If you don’t have an emergency savings fund set aside, you might find yourself in deep trouble when the time comes. It is important to have a good sum of money in your savings in case of emergencies. Start a savings fund now. Most people employ the method of “paying yourself” first for every paycheck where they prioritize putting a portion of their paycheck into their savings.

Piling up unnecessary debt

It can be hard to differentiate between necessary and unnecessary debt. The simple rule for this is you to take out loans for what you need instead of what you want. Do you really need that bigger house or that grand opulent wedding? If the estimated payments are over your budget, it might be best to raincheck that purchase. Avoid piling up unwanted debt by researching and making calculations ahead of time so you know how much to save and how long it will take to save.

By avoiding these money mistakes or figuring out a way to fix similar patterns in your money management, you can better handle your finances. If you are not sure what your next steps are make an appointment with your local branch today.