Even the most well-versed personal finance gurus still make money mistakes, so don’t ever feel like you aren’t doing okay. Everyone is simply trying to do their best and mistakes are to be expected–even inevitable.
However, there are some common money mishaps that you can learn to avoid simply by making yourself aware of the pitfalls others have fallen into. Financial mistakes aren’t the easiest to undo or bounce back from, so try and avoid making these mistakes in the first place.
Save yourself the stress and cash loss by steering clear of the following common money mistakes:
Falling Behind on Payments
For most of us, large purchases are typically made using various types of loans and financing. Do not get behind on any of your monthly payments. Revolving lines of credit typically report late payments to credit bureaus, so this is always best to be avoided. Allowing payments to build up can dig you into a debt trap that is nearly impossible to break free from. Late fees will stack up on top of increased interest rates and it will feel never-ending. This goes for all of your debt payments: credit card minimums, auto loans, title loans, mortgage, etc.
Quitting Without a Plan
Even if your job might not be a good fit, it is never a good financial decision to quit your job without a back-up plan It is a great idea to avoid quitting your job without having another job lined up or at least having a plan in place. You aren’t eligible for unemployment if you quit and you can never predict the job market or how long it will take you to find a new job. Always start your job hunt before leaving a current job so that you have the security of knowing a paycheck will be coming in soon to cover your bills.
Sticking with a Dead-End Job
Strangely enough, another financial mistake is to stay at a dead-end job that is going nowhere. If there is currently no room for salary or positional growth, you ought to look into moving onto a better job with higher pay and room for raises and promotions. Don’t stifle your financial potential simply because you are afraid of change! Always be on the lookout for better opportunities.
Buying a Brand-New Car
It’s almost never a smart financial move to buy a brand-new car since the car automatically drops in value the moment you drive it off the lot. If you cannot afford to pay in cash for that brand-new car, then it is not worth it as you will likely lose a significant amount of money in interest costs! Consider instead getting a slightly used car, as it will be much better for your finances in the long run. The depreciation of cars happens most in the first few years, so you can avoid being upside down on a car loan by buying a car that isn’t brand new.
Quick Financial Decision Making
When you are making big financial choices, you never want to make them when you are stressed, hurried, or pressured. It’s very important to be measured, well-informed, and levelheaded when making big financial decisions. You want to employ thoughtfulness and patience when making choices that can greatly impact your future. Do the research you need to do and approach possible debt or life changes with care. Making moves from a place of anxiety never ends well.
No matter how prepared you are, you will end up making some money mistakes over the course of your life. But you don’t have to make the more common and avoidable ones. Keep your eyes open, always be willing to learn, and you will be just fine!