We all make some of the dumbest money mistakes at some point in our life. From spending money on useless things, buying clothes we won’t even wear, from spending more than we make to racking up credit card debts, we make the stupidest money mistakes. After all we are all humans.
But if we learn from these mistakes and know about these money mistakes, we are less likely to repeat them or make them.
That is why I have compiled eight of the dumbest money mistakes people make all the time and how you can fix or avoid them.
Check out now:
- 7 Incredible Money Tips to Become a Millionaire this Year
- 5 Best Money Saving Tips I Wish I knew In my 20s.
- 5 Passive Income Streams That Will Make You Rich
1. Having no or inadequate emergency funds.
As the name suggests, emergency funds are designed to help you when there is in fact a financial emergency. You could lose your job and need money to pay your rent; your car might need a newer engine; or you might have a large health bill.
Without an emergency fund, you might wind up deeply in debt.
To fix this, put at least six months worth of living expenses in a high-yield online savings account. Today’s best saving accounts will earn you more interests on your money than what a typical traditional savings account will give you. The savings accounts calculator will tell you how your savings will grow over time.
Also, if all of your paycheck goes to bills and you have nothing left to save, then there are several side hustles you can do to make extra income:
- Start a blog. If you’re interested in starting a blog that makes money fast, I created a step-by-step guide that will help you start a blog of your own for cheap, starting at only $3.95 per month (this low price is only through my link) for blog hosting. In addition to this low price, you will receive a free blog domain (a $15 value through my Bluehost link if you purchase at least 12 months of blog hosting.
- Take Surveys. If you want to make extra cash, I suggest that you take surveys online. I recommend, Pinecone Research (earn minimum $3 per survey), Swagbucks ($5 sign up bonus + get paid to take surveys), InboxDollars ($5 sign up bonus + get paid to take surveys), Ebates (earn up to $40 cash back), YouGov US Males ($2 bonus + $8 – $10 per hour), MySurvey ($2 sign up bonus + 5 per survey). See this blog post for a complete list.
- Sell your stuff on Decluttr. Do you have CDs, DVDs, Blu-rays, old cell phones and games you don’t want anymore? Then sell them through Decluttr! Decluttr is the fastest and easiest way to make extra cash by selling your unwanted CDs, DVDs, and more.
- InboxDollars pays you in cash to watch fun videos, take surveys, play games, shop online, search the web and more.. They’ll also give you a $5 bonus for free just to give it a try. By spending just 5 to 10 minutes on your free time, you can earn $50 to $70 a month with InboxDollars.
- Swagbucks. Just as Inbox Dollars, Swagbucks pay you to watch videos, shop online, take polls etc.. Also by signing up through my link , you will receive $5 for free for signing up.
- Sign up for a website like Ebates where you can earn CASH BACK for just spending like how you normally would online. Also, when you sign up through my link, you’ll receive a free $10 gift card bonus to stores like Macys, Walmart, Target, etc.
- Sell your photos on shutterstock. Do you like to take photos for fun? Why not get paid for it? Shutterstock is a marketplace that allows you to sell your photos.
- There are many other side hustles listed in my post 16 Proven Ways to Make Money Fast.
2. Having too many accounts.
Another dumbest money mistakes people make about money is that they have too many accounts.
If you have several bank accounts, mutual funds, brokerage accounts, you might be spending a lot of money on fees. You might also find it difficult to keep track of things.
To fix this, consolidate your bank accounts to one checking account, have a high-yield online savings account, and one brokerage account.
3. Failing to take advantage of your employer’s 401(k) plan.
This is the dumbest money mistakes of all: missing out on your employer 401(k). If your employer offers a 401(k) plan, it would be dumb not to enroll in one. Any tax deferred account is a good deal when it comes to building wealth. And your employer 401(k) is the best of all, especially if your employer matches your contribution.
To fix this money mistake, go talk to the HR department at your work and enroll, because you might be losing money.
4. Failing to set financial goals.
It’s hard to imagine how you’re going to be financially independent if you don’t set any financial goals. Some people spend more time planning their vacation than they do planning they financial future. And they wonder why they are always broke and live paycheck to paycheck.
To fix this, think for a moment and write down some specific financial goals – whether large or small, short or long-term – for the future and make a plan to achieve them.
5. Failing to track day-to-day spending.
If you don’t know where your money is going day to day, you’re probably spending too much. And you need to track your spending.
Failing to track where your cash is going is what gets you into trouble. It’s easy to lose track of $3.5 on a caffe latte, or $5.50 on a a Uber pool ride. These everyday little things end up costing more over time.
To fix this money mistake, do a spending diary to find our where your money is going each day or try Personal Capital. Personal Capital is like Mint.com. It helps you track your day to day spending.
6. Failing to do a budget.
One of the best ways to take control of your finances is to do a budget.
A budget is simple tool that help you understand the money going in and the money going out each month. But most people ignore this simple tool.
A budget shows if you are spending more or less than you can afford.
To fix this, learn how to create a budget by reading this: How To Create a Budget And Learn How to Stick With It.
Tip: I suggest that you check out Personal Capital. Personal capital is a great budgeting tool; it helps you track all of your finances in one place. It allows you to connect all of your financial accounts including your mortgage account, your bank accounts, your investment accounts, your credit card accounts, your retirement accounts, etc. The good thing is, it’s totally FREE.
7. Failing to diversify.
It can be tempting to put all your money in one place, because it is convenient and easy. For example, you might put all your money into stocks. But this is the wrong approach, because in this example, the stock market might go down and therefore, you can lose all of your money.
To fix this money mistake, divide your assets among high yield online savings accounts, real estate, bonds, money market funds, etc.
8. Ashamed to invest small amounts.
One of the worst excuses I hear from people all the time is that they don’t have much to invest or to save. With this attitude, they will never save or invest anything. To me not saving anything at all and living paycheck to paycheck, is just being irresponsible.
Related: How To Stop Living Paycheck to Paycheck.
To fix this, start saving something from your paycheck. It can be as small as $10. The amount is not important. What is important is for you to get into the habit of savings.
The idea is to begin with something small. And as you get into the habit of saving, you can increase the amount to $20, $50, $100 and so on.
What are some of the dumbest money mistakes you or people you know make all the time? Do you agree or not? Share your thoughts in the comments below.
Check out now:
- 7 Incredible Money Tips to Become a Millionaire this Year
- 5 Best Money Saving Tips I Wish I knew In my 20s.
- 5 Passive Income Streams That Will Make You Rich
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