Many Americans struggle with basic money management. It is something not taught in most schools. When you are old enough to start making your own money, it can be overwhelming and lead to bad spending habits and accruing debt. Most people don’t have an emergency fund and don’t pay enough attention to their cash flow each month leading to overspending. No matter your income level, these are some common money mistakes anyone can make.
Examples of Money Management Mistakes
- Not actively tracking your money coming in and being spent. Most people will be able to rattle off some their monthly expenses and bills if asked how much they are spending. However, most people will be surprised just how much they are spending when they start receiving bills and checking their bank accounts. Don’t just spend money on a whim without first considering whether you can afford it. Budgeting is a good first step towards rectifying this money management mistake.
- Living paycheck to paycheck. For some people, living paycheck to paycheck is not a choice but a reality. For high income earners, it’s frequently a result of many, sometimes poor, money decisions. Saving for retirement and emergencies is something you should absolutely make a priority if you have not already done so.
- Only saving what is left at the end of each month. Just like the previous money management mistake, this can mean having no money set aside for when you really need it. Don’t wait to save only the money you don’t spend from your paycheck. You must pay yourself first. Put aside a specific amount of the money you make before you do anything else.
- Paying off a little extra on all your credit card debts. It is absolutely a good idea to pay a more than the minimum due. However, putting extra money towards several debts is actually less effective than putting it all towards your highest interest debt. Pay off that debt first, then work your way down.
- Not having an emergency fund. It can be tough to take money out of your paycheck to set aside for an emergency that might never come. However, if you have a major car problem and need repairs quick or you get stuck with large medical bills because of an accident, you’ll be glad to have the money available.
- Paying unnecessary bank fees. Avoiding out of network ATMs, overdrawing your bank account, and paying credit card bills on time will help you save a lot of money in bank fees. Also, some banks have a long list of fees in which case you should consider switching to a different institution.
Money Management Help
It can take a lot of work to change your money habits. The money coaches at The Alexandrite Group have the experience and expertise to get you on the track towards a better relationship with money. Contact us today to schedule a consultation.