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You’ve heard “it’s the little things that count”, right?
I’m sure everyone can name many little things that have more meaning than a big event in their lives.
The same can be said about finances – it is often the little things you do, the small actions you take, that have the biggest impact on your financial security, both in the present and in the future. Of course, this concept is true whether the little things are positive or negative.
So, in this article, we’re going to look at 10 small money mistakes that many people make, often unaware of the impact they are having on their financial security. Read through them; identify the ones that you are guilty of and take the necessary steps to turn it around.
Not Having a Budget
I know, you’ve heard it all before but have you taken action on this one yet? A budget provides you with a financial roadmap to get to where you want to be in life. A budget helps you track your finances so you know exactly where you are and whether you’re on track. A budget gives it to you plain and simple – the good, the bad and the ugly. Not having a budget is a small mistake that can turn into a huge financial error!
Careless Spending
This type of over-spending has an accumulative effect. It’s those little things again – the little things that seem not to matter at the time. So look at the take-outs you buy, the dinners out, the expensive designer coffees, the magazines, the impulse buys of things you really didn’t need, the ‘stuff’ you buy without thinking it through. Controlling careless spending of even $5-10 a week and putting it into savings, can add up significantly over time.
Having Multiple Credit Cards
Buying with credit cards leads to spending more than you earn and we all know where that leads. Interest rates on credit cards are usually the highest around so you are actually paying many times what the item is worth. The more cards you have, the greater the problem, so start by paying off the smallest balance and cut up that card. This small money mistake has a sub-section – accepting the so-called ‘free’ credit card upgrades or new cards. Increasing your credit card limit is really increasing your debt, or at least your exposure to debt, so say ’No!’
Living Paycheck to Paycheck
Living from paycheck to paycheck is a dangerous and precarious practice. Many people think they have no choice in this but the reality is, most people can find small ways to cut spending so that they can put a small regular amount into savings.
Buying Items On Sale
We all love a bargain, but buying something we don’t need just because it’s cheap, isn’t a bargain. It’s wasted money.
Making Never Ending Payments
You know the ones I mean, when you sign up for a product or service that requires a monthly payment, directly debited continuously from your account. This includes cable TV, magazine and radio subscriptions, movies, pagers and cell phones. You keep paying but you don’t ever own anything. Get rid of ones you don’t need; stopping some of these never-ending payment plans is a great way to start savings.
Not Having an Emergency Fund
It is dangerous to spend every cent you earn and not to have buffer against illness, injury, job loss or hard economic times. Make establishing an emergency fund a priority.
Ignoring Your Debt
Debt is not just going to go away, you must handle it and work to whittle it away. There are many debt-reduction strategies that will help you reduce your amount of debt and therefore the amount of interest you are paying. The key is to take action, even small ones.
Not Being Properly Insured
You are the wage-earner, the care-giver, the home-maker, whichever of these titles you hold. If anything happened to you, what would happen to the household? Look into effective health, disability and life insurance plans.
Not Having a Financial Plan
Having clear financial goals helps you control spending and increase savings because you know where you are headed. When you don’t have financial goals, you risk spreading yourself too thin which exposes you to increased debt and financial disaster.
I hope that reading these 10 small money mistakes will help you reassess your own financial situation and behaviors. Once you know the problem, you can take steps to correct it. Trust me, being proactive is worth it. I haven’t always been so money wise and have made many of the mistakes that I have mentioned above. I don’t want you to have to learn the hard way like me so get on top of things now.
So, have you made any of these mistakes? What have you done to rectify them?
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Comments
Small Money Mistakes That Have Big Consequences — 42 Comments
Before getting our stuff together awhile back I pretty much made all of these mistakes. However, now I’m happy to say that we don’t trip up on any of them anymore!
I am with you. In my early 20’s I made numerous money slip ups. I am so glad I cleaned up my act and got smarter. My future financial self is really grateful. Plus I am so much less stressed.
It amazing what picture you can paint once you actually see where things are going. I didn’t used to track things either but I do now. I am much more wise with my money.
We use Quicken and we love it. It tracks everything.
Getting away from “automatic buying” – buying the same stuff week in week out has been the biggest for me. No more cruising around the supermarket on remote control.
Then always having a plan of where to stash the next few saved pennies – if you don’t have a plan for them they somehow disappear don’t they?
It is amazing how we can train ourselves to be so mindless with some activities. You call it automatic buying. Becoming aware is so key to making changes. It sure isn’t easy when you first start though.
You’re totally right about not buying things on sale. Like my grandfather always said, “If you don’t need it, then it’s not a good deal!” And that’s true, a pair of jeans for like 70% off are not a deal if you don’t need jeans, because then you’d just be spending money that you weren’t planning on!
When it comes to insurance the value of the item both monetarily and sentimentally have to come into the equation. If the value is high in both categories then insurance is worth it. If though the item isn’t that important and didn’t need to be replaced, then you mind as well save yourself the fees.
“Not having a budget” I think is rightly the first mentioned mistake. Without a budget providing, as you wrote, “a financial roadmap to get to where you want to be in life”, I don’t how one can answer the question, “Can we afford this?” I fear the answer too often depends only on whether one has enough cash in the bank or credit on the card at the moment, and future goals are unwittingly sacrificed.
Well said Kurt. I totally agree. Until you know what you have to deal with how can you even make one step forward? It just doesn’t make logical sense. Unfortunately though, logical sense isn’t so common.
In addition to buying items on sale, I would add buying items that aren’t on your list. It’s easy to add items to your cart as you’re walking through a store. It takes discipline to stick to a list.
Agreed. A list is really important. I think one of the biggest culprits of this is the grocery store. People wander through the isles and think “I haven’t seen that before. Let’s try it.” Not good!
With grocery shopping I make a list throughout the week. In the store I put on my mental blinders and stick to the list. I heard of a device that is on the market for stores. It’s a small machine, that can be hidden, and it puts out food smells. Supposedly it causes sales of certain foods, bread for example, to go way up. I suppose if my store ever gets one I’ll have to shop while breathing through my mouth, lol. I’ve already thought of earplugs because that happy, calming music makes me want to buy things I don’t need, as if I’m a well-to-do person at a carnival, instead of just a place that carries the things I need to exist. I have to harden my heart in stores, get what’s on the list, and breath a sigh of relief when I get out of there.
I got into trouble at one point with tons of monthly/annual payments for stuff I wasn’t using (gym membership, magazines, newspapers, etc.). I saved a huge amount by just going through those and cutting all the subscriptions I honestly didn’t use.
I did the same thing two years ago. I also saved not only money but a ton of space. Some of that stuff just adds to the clutter. I think things like magazines are the worst. You never get around to reading them all.
It’s amazing what kinds of bad situations can come into ones life. You just never know so why not ease the stress a bit with having a plan in place. I guess for me this just comes natural. I seem to create contingency plans for fun, or at least that is what my hubby says.
Great post, Miss T.! Definitely a good checklist to go through and see how to better manage my money. I think the hardest one for me is the “buying items on sale”. I can’t resist cheap things!
You are not the only one. I too have fallen into this trap. It is ok to buy things on sale, but only if you need them. This is the hard part. Just abstain from shopping for a while. That should do the trick. lol. Seriously though, if you work out a budget you can better plan what kinds of things on sale you need and want that you can actually afford.
I think at various times in my life I have made all these mistakes, although mostly only for a short period.
I stopped it by setting the budget, then I saw where we were wasting money and change my behaviour to suit, for example I would meet friends at the mall which would always lead to spending money, so instead we now meet at one of our houses or a park or something.
We are two peas in a pod Kylie. I went through the same journey. I definitely have made my share of these mistakes. A budget really helps provide a good picture of reality. I find that since I have had a budget in place my money goes a lot farther.
I think a lot of people buy things on sale thinking they’re getting a great deal regardless of where they are financially. You aren’t actually saving money you’re spending money! If you don’t need it don’t get it!
When we went through our latest budget cut (my wife left work to stay at home with the kids), we realized just how much careless spending we were doing. We always thought we were budget-conscious until we really stopped to look at the cumulative effect of small impulse purchases. When we both committed to spending only for necessary groceries, gas and bills, we saved hundreds of dollars. It is amazing how quickly a dollar here and there can add up.
Self awareness is key to making any kind of change or improvement. I am glad to hear there is open communication between you and your wife about finances. Working as a team is a huge part of whether you fail or succeed.
It is great that you have been able to save hundreds of dollars. What an eye opener. What are you going to do with those savings now?
I like what you said about buying things on sale. It’s a funny trick in our human psyche. To not buy anything is still far cheaper than to buy something on sale.
To evaluate a sale I think we need to fall back on the difference between a ‘need’ and a ‘want’ – only then can you resist the ‘sale’.
But it is difficult. It can be really hard to tell yourself no when you want something. And to be able to do that over and over again is even more difficult.
Very well said. Our brains and emotions don’t always make it easy for us. One thing that I find works is to focus my thoughts on something else. For example, if we are saving for a trip and I am excited about it, this goal keeps me focused so I don’t waste any of my savings on something less important.
Many years ago, this was totally me; I thought if I ignored my money problems, they’d just disappear. Though some of the mistakes I made did eventually fall off my credit report, I had to learn the hard way. Now I keep track of my money, use it as a guideline to form a “rough” budget, pay down debt in a timely manner, and save money on the side. There’s always room for improvement, but at least I’m now on the right track.
It was me too a few years ago LH. The picture was not pretty. Good for us for cleaning up our act early enough to still have a sound financial future. That is a big deal and we should be proud of that. Glad you are now on the right track. Feels great doesn’t it?!
It is never to late to start you know. Plus you can allot discretionary spending into your budget. We do this for fun things so we still maintain a quality of life.
If you want to use sales to save money at the grocery store it helps to keep a price book. List everything that you use regularly in a spreadsheet. Start keeping track of how much you pay for each item, the regular and sales prices on the different size packages, and how often the sales are on each item. If you see that some nonperishable that you use a lot of is on sale every 6 weeks then you have an idea how much of it to buy during each sale. Also keep an inventory so you know if you have enough to last until the next sale so you don’t need to buy it again because you don’t remember how much you have.
Look at the ad prices for meat and plan menus ahead of time to take advantage of the prices.
I’ve made so many of these mistakes! I’m getting better, though. It’s really hard building up savings when you’re living on a shoestring budget, but it is possible!
Tell me about it. There isn’t much room but like you say there is a little bit. I always like to remind myself that the little steps add up in the end. Keeps me motivated.
I gave up spending cold turkey for 3 months (except for groceries and gas)! I started reviewing my past cc bills and I couldn’t believe how much I was spending on non-essential items; that was really an eye opener. It was tough but at the end I was wiser and had a bit more money to put down on the mortgage.
I had to go bust, to figure some of this stuff out. Pay attention!
I might add a couple of quick things:
1) If you live in a dual income household that somehow (break up) becomes a one income household… recover & reorganize quickly! I had lived in a 2 income household for many years, and the money situation was just fine. I thought I had budget, but it turns out a budget is really easy to keep when you make more than you spend. When my two income situation became a 1 income situation, I figured… no rush! I’m doing just fine financially, and I should still be fine… I now see the error in the point of view.
2)Booze, Cigarette’s & the non essentials – I don’t smoke, but I used to drink 3 or sometimes 4 nights a week. Not saying I was PuNk In DrUbLiC every time… but none the less, it costs money… and it gets you nowhere! I’m not saying to never drink or smoke, but just realize what a financial impact it can have… quit if you can, or if not at least moderate!
I think these are all good recommendations. I would part in agreement with one though. If your need to work on your credit score, getting a credit card limit increased will help with your CC debt ratios. It’s also better than adding a credit card since a new card will lower the average age of your credit cards.
You’ve heard “it’s the little things that count”, right?
Before getting our stuff together awhile back I pretty much made all of these mistakes. However, now I’m happy to say that we don’t trip up on any of them anymore!
I am with you. In my early 20’s I made numerous money slip ups. I am so glad I cleaned up my act and got smarter. My future financial self is really grateful. Plus I am so much less stressed.
We used to never keep track of how much we spent. Then we realized we were spending an ungodly amount on food!
It amazing what picture you can paint once you actually see where things are going. I didn’t used to track things either but I do now. I am much more wise with my money.
We use Quicken and we love it. It tracks everything.
Getting away from “automatic buying” – buying the same stuff week in week out has been the biggest for me. No more cruising around the supermarket on remote control.
Then always having a plan of where to stash the next few saved pennies – if you don’t have a plan for them they somehow disappear don’t they?
It is amazing how we can train ourselves to be so mindless with some activities. You call it automatic buying. Becoming aware is so key to making changes. It sure isn’t easy when you first start though.
You’re totally right about not buying things on sale. Like my grandfather always said, “If you don’t need it, then it’s not a good deal!” And that’s true, a pair of jeans for like 70% off are not a deal if you don’t need jeans, because then you’d just be spending money that you weren’t planning on!
Your grandfather was a very smart man. I love that quote. I am going to have to use it.
When it comes to insurance the value of the item both monetarily and sentimentally have to come into the equation. If the value is high in both categories then insurance is worth it. If though the item isn’t that important and didn’t need to be replaced, then you mind as well save yourself the fees.
“Not having a budget” I think is rightly the first mentioned mistake. Without a budget providing, as you wrote, “a financial roadmap to get to where you want to be in life”, I don’t how one can answer the question, “Can we afford this?” I fear the answer too often depends only on whether one has enough cash in the bank or credit on the card at the moment, and future goals are unwittingly sacrificed.
Well said Kurt. I totally agree. Until you know what you have to deal with how can you even make one step forward? It just doesn’t make logical sense. Unfortunately though, logical sense isn’t so common.
In addition to buying items on sale, I would add buying items that aren’t on your list. It’s easy to add items to your cart as you’re walking through a store. It takes discipline to stick to a list.
Agreed. A list is really important. I think one of the biggest culprits of this is the grocery store. People wander through the isles and think “I haven’t seen that before. Let’s try it.” Not good!
With grocery shopping I make a list throughout the week. In the store I put on my mental blinders and stick to the list. I heard of a device that is on the market for stores. It’s a small machine, that can be hidden, and it puts out food smells. Supposedly it causes sales of certain foods, bread for example, to go way up. I suppose if my store ever gets one I’ll have to shop while breathing through my mouth, lol. I’ve already thought of earplugs because that happy, calming music makes me want to buy things I don’t need, as if I’m a well-to-do person at a carnival, instead of just a place that carries the things I need to exist. I have to harden my heart in stores, get what’s on the list, and breath a sigh of relief when I get out of there.
Those sound like some interesting machines. Marketing at it’s finest right?! Scammers!
Sticking to the list can be hard but it is well worth it. Keep up the hard work.
I got into trouble at one point with tons of monthly/annual payments for stuff I wasn’t using (gym membership, magazines, newspapers, etc.). I saved a huge amount by just going through those and cutting all the subscriptions I honestly didn’t use.
I did the same thing two years ago. I also saved not only money but a ton of space. Some of that stuff just adds to the clutter. I think things like magazines are the worst. You never get around to reading them all.
Okay okay maaaaaaaaaaaybe I need a budget.
lol. Yes you do. Try using Quicken. We use it and find it really helpful.
I agree that not having an emergency fun might be small for some people but it can lead to a lot of trouble if you need it in the future
It’s amazing what kinds of bad situations can come into ones life. You just never know so why not ease the stress a bit with having a plan in place. I guess for me this just comes natural. I seem to create contingency plans for fun, or at least that is what my hubby says.
Great post, Miss T.! Definitely a good checklist to go through and see how to better manage my money. I think the hardest one for me is the “buying items on sale”. I can’t resist cheap things!
You are not the only one. I too have fallen into this trap. It is ok to buy things on sale, but only if you need them. This is the hard part. Just abstain from shopping for a while. That should do the trick. lol. Seriously though, if you work out a budget you can better plan what kinds of things on sale you need and want that you can actually afford.
I think at various times in my life I have made all these mistakes, although mostly only for a short period.
I stopped it by setting the budget, then I saw where we were wasting money and change my behaviour to suit, for example I would meet friends at the mall which would always lead to spending money, so instead we now meet at one of our houses or a park or something.
We are two peas in a pod Kylie. I went through the same journey. I definitely have made my share of these mistakes. A budget really helps provide a good picture of reality. I find that since I have had a budget in place my money goes a lot farther.
I think a lot of people buy things on sale thinking they’re getting a great deal regardless of where they are financially. You aren’t actually saving money you’re spending money! If you don’t need it don’t get it!
So simple yet so hard for many. Well said.
When we went through our latest budget cut (my wife left work to stay at home with the kids), we realized just how much careless spending we were doing. We always thought we were budget-conscious until we really stopped to look at the cumulative effect of small impulse purchases. When we both committed to spending only for necessary groceries, gas and bills, we saved hundreds of dollars. It is amazing how quickly a dollar here and there can add up.
Self awareness is key to making any kind of change or improvement. I am glad to hear there is open communication between you and your wife about finances. Working as a team is a huge part of whether you fail or succeed.
It is great that you have been able to save hundreds of dollars. What an eye opener. What are you going to do with those savings now?
I like what you said about buying things on sale. It’s a funny trick in our human psyche. To not buy anything is still far cheaper than to buy something on sale.
To evaluate a sale I think we need to fall back on the difference between a ‘need’ and a ‘want’ – only then can you resist the ‘sale’.
But it is difficult. It can be really hard to tell yourself no when you want something. And to be able to do that over and over again is even more difficult.
Very well said. Our brains and emotions don’t always make it easy for us. One thing that I find works is to focus my thoughts on something else. For example, if we are saving for a trip and I am excited about it, this goal keeps me focused so I don’t waste any of my savings on something less important.
Many years ago, this was totally me; I thought if I ignored my money problems, they’d just disappear. Though some of the mistakes I made did eventually fall off my credit report, I had to learn the hard way. Now I keep track of my money, use it as a guideline to form a “rough” budget, pay down debt in a timely manner, and save money on the side. There’s always room for improvement, but at least I’m now on the right track.
It was me too a few years ago LH. The picture was not pretty. Good for us for cleaning up our act early enough to still have a sound financial future. That is a big deal and we should be proud of that. Glad you are now on the right track. Feels great doesn’t it?!
It is never to late to start you know. Plus you can allot discretionary spending into your budget. We do this for fun things so we still maintain a quality of life.
If you want to use sales to save money at the grocery store it helps to keep a price book. List everything that you use regularly in a spreadsheet. Start keeping track of how much you pay for each item, the regular and sales prices on the different size packages, and how often the sales are on each item. If you see that some nonperishable that you use a lot of is on sale every 6 weeks then you have an idea how much of it to buy during each sale. Also keep an inventory so you know if you have enough to last until the next sale so you don’t need to buy it again because you don’t remember how much you have.
Look at the ad prices for meat and plan menus ahead of time to take advantage of the prices.
That is such a great idea. I have ever thought of that. Thanks. I will definitely have to try it.
I’ve made so many of these mistakes! I’m getting better, though. It’s really hard building up savings when you’re living on a shoestring budget, but it is possible!
Tell me about it. There isn’t much room but like you say there is a little bit. I always like to remind myself that the little steps add up in the end. Keeps me motivated.
I gave up spending cold turkey for 3 months (except for groceries and gas)! I started reviewing my past cc bills and I couldn’t believe how much I was spending on non-essential items; that was really an eye opener. It was tough but at the end I was wiser and had a bit more money to put down on the mortgage.
That is great. I actually started doing the same thing recently. I wanted to reevaluate where I was at. It is such an informative exercise.
I had to go bust, to figure some of this stuff out. Pay attention!
I might add a couple of quick things:
1) If you live in a dual income household that somehow (break up) becomes a one income household… recover & reorganize quickly! I had lived in a 2 income household for many years, and the money situation was just fine. I thought I had budget, but it turns out a budget is really easy to keep when you make more than you spend. When my two income situation became a 1 income situation, I figured… no rush! I’m doing just fine financially, and I should still be fine… I now see the error in the point of view.
2)Booze, Cigarette’s & the non essentials – I don’t smoke, but I used to drink 3 or sometimes 4 nights a week. Not saying I was PuNk In DrUbLiC every time… but none the less, it costs money… and it gets you nowhere! I’m not saying to never drink or smoke, but just realize what a financial impact it can have… quit if you can, or if not at least moderate!
I think these are all good recommendations. I would part in agreement with one though. If your need to work on your credit score, getting a credit card limit increased will help with your CC debt ratios. It’s also better than adding a credit card since a new card will lower the average age of your credit cards.