5 Common Money Mistakes to Avoid
I came across a study the other day that asked people where they burned most of their hard-earned money.
The answer of over 64 million Americans? “Having fun.” I don’t think there’s much wrong with having fun. But when we spend too much on having fun, we often end up regretting it when we suffer financially.
The problem is especially when we spend money we don’t have. Looking back, most people don’t think it’s worth it to work yourself into debt.
When we overspend, it’s usually for leisure or on things we desire, but don’t really need. It’s a classic money mistake that many of us have made.
It really makes a difference when we stop spending money on the things we don’t need. When we do that every day, and if we invest our money wisely, we build inevitable wealth.
But there are also other money mistakes we often overlook. Some may seem small, but they leave a big impact. Here’s what they are and how you can start fixing them today.
Mistake #1: Not having a clear financial goal
When we’re too busy with work and other tasks, we often don’t want to take the time to sit down and strategize our finances. But when you’re unclear about your financial goals, it’s hard to take your money seriously.
What do you want to achieve financially? And where are you on your journey?
When you know which phase you’re in, you can be more clear about what you really need. In my personal finance guide, I talk about the four phases of personal finance:
- From nothing to something — this is when you’re living paycheck to paycheck
- Gaining traction — you have at least one month’s worth of expenses saved
- Having peace of mind — you have a full emergency fund
- Financial freedom — you have enough cash and investments to cover your cost of living
When you don’t know which phase you’re in, you’ll tend to make the impulsive decisions that get you further from financial freedom.