Most of us make common money mistakes, even those who are savvy with money. Are you tired of making money mistakes? Are you looking for fresh ideas to get ahead financially?
Read on to learn about these common money mistakes you’d be smart to avoid.
Money Mistake #1
We all want to stretch our money further.
But the sooner we become fully aware of the difference between price and value, the better it is for our budget.
A low price may seem like a great deal, but do check the quality of the item or service you’re paying for.
Take shoes for example. Most cheap shoes just don’t last. I learnt a lesson myself – I used to buy cheap shoes for myself and my son, but they only lasted a few months.
Low price, but very bad value 🙁
The materials they are made of just aren’t durable. In the end, having to keep buying replacements cost me much more money 🙁
Having learnt my lesson, I now buy better quality footwear when they are on sale.
Skechers and Asics shoes are comfortable and easily last about three years of daily wear. You can have a look at my pair of Skechers shown below. It’s been serving me for more than 3 years now and is still going strong.
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They come in a whole range of different styles and colors including men’s and women’s walking shoes, loafers and sneakers. Learn more about them here.
So, be aware of the risk of spending more in the end with cheaper stuff.
It’s true that sometimes stuff may be cheap and cheerful. But often we need to pay more for good quality.
This is OK, as you get great value when you choose carefully. You’ll save much more and get a lot more from quality goods and services.
Money Mistake #2
Going for cheap foods all the time
We all know that cutting back on our food budget is a good way to save more money.
But be very careful!
Many people eat fast foods like burgers and fish and chips regularly as they’re cheap and tasty.
Most fast foods are NOT healthy.
Our diet is one of the most important things that determine our health. Learn from Healthline about how fast foods really harm our health.
Having fast foods frequently is actually setting yourself up for hefty doctor’s bills. Not to mention suffering the most unpleasant signs and symptoms of severe illnesses.
Even regular exercise cannot counter the ill effects of the unhealthy food that you eat.
So, do have a healthy diet and steer clear of fast foods. Healthy foods may cost more, but good health is priceless.
Learn to make healthy and delicious meals easily at home with this cookbook below. Learn more here.
Money Mistake #3
Overdoing our frugal measures
Having the intentions to become super frugal is great, but overdoing frugality can backfire.
Some moderation is always good to have. When we try to be too frugal, we may feel deprived and unhappy – negative feelings that cannot sustain the frugality efforts.
This frustration can sabotage our long-term finances as we can’t continue the strain of living frugally.
What to do?
Know yourself and how you are feeling about your frugal measures. Do not deny yourself all the things you enjoy.
For example, you can simply reduce the number of times you eat out each week.
If you cut back totally, you may be unable to stick to your tough regime.
When you succeed in your sensible frugal efforts, it’s then perfectly fine to reward yourself with some purchases that you really value, within reason of course.
Say you have saved $1,000 for your emergency fund. You certainly deserve a gift for yourself that costs $60.
Read about our frugality mistakes which cost us dearly.
Money Mistake #4
Buy cars with a low resale value
It’s good to buy a car you like and that suits your needs. But it’s a mistake if the car you’re buying has a low resale value.
Whether you are buying a new or used car, do the necessary research into its resale value.
Look up Kelley Blue Book’s website for the info on new car resale value.
For info on used car resale value, read this for more info.
Certain makes and models of cars like Toyota and Honda are more popular and so enjoy a higher resale value than others.
So, it’d really pay for you to choose from among these makes and models.
While it’s true that you’ll pay more when you buy a popular type of automobile, keep in mind that when it’s time to sell, it’ll be easier to sell and there’ll be less depreciation you’ll suffer.
Money Mistake #5
Having a Habit of Eating Out
This relates to both work lunches and dinners out.
It may not seem like a big deal, but eating out gets costly fast. It tends to be less healthy too, as more salt and sugar are found in outside food.
So, it costs you your health and your pocket when you eat out too much ☹
Cut down gradually the number of lunches and dinners out.
This makes your frugal actions more sustainable, because we all need time to get used to not doing things that have become habits.
If it’s meal planning that puts you off cooking at home, why not consider the $5 Meal Plan, a meal plan service? Find out how it works here.
It costs just $5 a month. Try it FREE for 14 days and see if it works for you. You can cancel it at any time with no questions asked. There’s no risk to you at all.
Money Mistake #6
Buying your home based on price alone
20 years ago, we bought a property in an outer suburb.
We wanted to be near our friends and we wouldn’t need a mortgage as the house was cheap.
When we realized that its price appreciation was near zero after several years, we bought a small unit in a desired part of town.
This second purchase was again based on its affordability.
However, it didn’t occur to us that the orientation of the unit and its location beside a busy road turned many potential buyers off.
The irony is that the property did increase in value somewhat, but not at the same rate as similar ones in the vicinity.
Avoid my mistakes!
Where you decide to buy your home is important.
Buy based on how desirable the location, suburb and features like layout are.
The home’s value is likely to increase over time, which makes your higher purchase price worthwhile.
Money Mistake #7
Living in a house that’s way too big
There’s no way around it. A big home usually means big mortgage payments.
A friend built a small house of 1,100 square feet for his family of four.
His friend nearby lives in a big house with 4 living rooms.
He asked his neighbor, “How many lounges do you use daily”?
The obvious answer: One.
I know of a couple and their cat who live in a 4,100 square foot house.
As this couple leaves for work each morning, I believe their cat benefits the most from its spacious and luxurious surroundings.
Live in a house that is adequate for your needs. You’ll pay less in terms of your:
Money Mistake #8
Upgrading stuff unnecessarily
With enticing advertisements appealing to our ‘needs’ and sense of self-worth, it’s not surprising we’re succumbing to this phenomenon called “upgrading”.
Another main cause of upgrading stuff is ‘peer influence’.
If my neighbor Mary can afford, so can I.
BUT do you really need that brand-new car with its latest tech?
No! Say no to burdening yourself with a pricier auto loan and higher interest payments.
Ask yourself,” What am I truly happy with? What suits me better?”
Mr MMT and I have been saving well, in part because we drive old but reliable cars and maintain them well. We don’t have auto loans to pay.
Instead of blindly following others, decide what suits you best.
Look after yourself and your money first. And your increased wealth will look after your future self well.
Money Mistake #9
Not doing the doable yourself
Next time before you ring a gardener, think of whether you can do the job yourself.
If you can DIY, why pay others unnecessarily?
Many years ago, I used to send my woollies to be dry cleaned.
My friend, an ex-nurse who retired at 30 years old, was distressed. She offered to hand wash my woollies for me.
Clearly, she knows that paying for dry cleaning is money down the drain.
The same goes for simple plumbing jobs that don’t come cheap when you use a plumber.
Seek advice at your local hardware store on what you can do.
Watch YouTube videos on how to fix common plumbing problems.
Money Mistake #10
Socializing too regularly
Cafes, bars, restaurants, movies, concerts, operas. These things cost – a lot.
I’m not saying that you should live a hermit’s life, but think of cheaper or free alternatives.
How about inviting your friends to your place for a get together. It doesn’t have to be anything fancy.
Everyone bringing just some food to share. It’s more important to enjoy one another’s company.
Or choose a neutral ground. How about a picnic outing?
We drove our friends around the surrounding countryside and they packed a picnic lunch to share.
Not only did we enjoy ourselves, the cost was minimal.
Money Mistake #11
Buying depreciating assets
Most of the things we buy lose their value over time – cars, bikes, furniture, exercise equipment, TVs . . .
According to this article, the moment you drive off in your brand-new car, it loses up to 11% of its value.
By the end of the year, your set of wheels may lose 30% in value.
For a $20,000 car that’s $6,000 down the drain in 12 months!
Never be tempted to buy a car with a prestige badge. Not even a used one.
They cost a lot more to buy and maintain, and are often less reliable (that means forking out more money for repairs).
Money Mistake #12
Taking up costly hobbies like golf or yachting
According to this site, an average set of clubs for casual golf players costs between $200-$400, while better ones cost $800 or more. Clearly, membership in country clubs doesn’t come cheap.
Money Mistake #13
Paying for things that are rarely used
For example, gym memberships, cable subscriptions or online newsletter subscriptions.
Instead of paying regularly for a gym membership, why not invest in an exercise machine?
It’s far more convenient, weather independent and accessible.
Money Mistake #14
Paying for products or services monthly, not annually
Fees are usually discounted when you make annual payments.
If you can afford it, make every effort to pay for essential products like health insurance annually.
You’ll save well this way.
Money Mistake #15
Following fashions and trends
Keeping up with fashions and trends is very costly.
Home decor, furnishings, clothes and so on quite quickly become “outdated”, claim fashion and trend gurus.
But isn’t it you who should decide if you’re happy with what you have?
Why spend unnecessarily and throw your money away just to have the latest “in” thing or “in” look?
Now that you know what the common money mistakes are, take action to protect your wallet against these financial pitfalls.
Your financial success depends on avoiding them.
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