Ditch These 14 Money Mistakes That Are Holding You Back

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Are you one of the many people out there who are struggling to get ahead financially? 

You’re not alone. 

Millions of Americans live paycheck-to-paycheck, and even those who are doing okay with their finances hit roadblocks from time to time. 

The good news is that while money management can be hard work, it doesn’t have to be complicated. 

Ditch these fourteen common money mistakes, and you’ll find yourself taking back control of your financial life in no time! 

It’s time for much-needed information about how ditching each mistake could jumpstart your journey towards better financial health.

#1. Giving Into Lifestyle Creep

Lifestyle creep is when our expenses grow as our income goes up. A popular example of this is a new college graduate.

They had no money in college, but now that they have a job, they want new clothes, a new car, and more.

If they can keep living the college lifestyle, they can save a boatload of money and set themselves up nicely for the future.

But it’s not just new grads who experience this. You are most likely guilty of lifestyle creep whenever you get a raise.

You might buy a new car or take an expensive vacation.

In an ideal world, you would keep living on the same income and save your raise.

But we both know that is not likely for most people.

A better solution is to make it a point to save a portion of your raise. If your raise is an extra $200 per paycheck, make it a point to put $100 into savings and use the other $100 for living expenses.

Of course, if you can save more, do so.

#2. Falling For Get Rich Quick Schemes

We all want wealth, but some of us fall victim to the idea we can skip the line and get rich overnight.

Unfortunately, no matter how often it’s said that you cannot become a millionaire overnight, too many people fall for get-rich-quick schemes.

While falling for these scams is terrible, what’s worse is you end up even further away from wealth.

#3. Ignoring Subscriptions You’re Paying

In today’s world, every company wants to get you signed up for a monthly subscription. Even Amazon is pushing its “subscribe and save” program more and more.

While the monthly cost is low for many services, the downside is it is easy to forget what you are paying for.

Fast forward a year or more; you could be paying for things you no longer use, wasting money.

Because of this, you need to review your subscriptions every few months. Depending on how you pay them, this could be easy or complex.

Again, thanks to technology, there is help.

Rocket Money, for example, will review your subscriptions and alert you to ones it thinks you can cancel. You can also have them negotiate some of your bills as a bonus.

#4. Not Investing In Yourself

To get ahead financially, most people think of ways to earn a higher return on their money or even switch jobs to reach a higher salary.

But only some think about investing in themselves.

The reality is you are your greatest asset. This means improving your skills will earn less of a return than this investment.

For example, if your job has you working with Excel spreadsheets all day, take a class to learn macros and other advanced Excel functions.

Then, take that knowledge and use it to get a more significant raise.

If your employer doesn’t budge, then you can look for employment elsewhere.

While you can argue you could find another job without these new skills, you can get a bigger starting salary with them.

Finally, this doesn’t only apply to your career.

If you can learn how to do basic repairs around the house, you can save thousands by not calling in a handyman.

#5. Giving Into Instant Gratification

We live in a world that has conditioned us to want everything at this very minute. And if we don’t get it, we either become upset or give in and put it on a credit card.

You have to learn to delay gratification.

Doing so will help you to avoid purchases you later regret.

So, how do you do this effectively? Whenever you see something you want, write it down. Then, in 30 days, review your list.

Chances are you won’t want the item in question. If you do, ask yourself why you want it and if there are any alternatives.

Then, if you really want it, spend time looking for coupons or other discounts to help you save money on the purchase.

#6. Not Tracking Your Spending

Budgeting isn’t glamorous, but you need to know where your money is going if you ever want to get ahead financially.

The good news is there are plenty of options to make budgeting your money easier.

One of the best options is Tiller Money. This is a spreadsheet budget that is automated. This means it automatically pulls in your transactions, so all you have to do is spend 5 minutes every few days making sure the spending categories are correct.

Make sure you start tracking how you spend money. Doing so will help you understand where you might be wasting money and can cut back to save.

#7. Not Earning Competitive Interest On Savings

You might think that since you have money in a savings account, you are smart with your money.

While you are more intelligent than those who keep everything in their checking account, you aren’t much better off if you aren’t earning a competitive interest rate.

Many savings accounts still pay less than 1% interest, even after interest rates and inflation have skyrocketed.

Take a few minutes to see what your savings account is paying. Ideally, you want a rate of 3% or higher. If it isn’t, you need to switch.

The good news is switching is easy, especially when you open an online savings account. For example, it will take less than 10 minutes to open an account at CIT Bank, and once you set it up, you can automate the entire process moving forward.

#8. Keeping High-Interest Debt

We all have debt. While some of us follow the Baby Steps of Dave Ramsey and hope to become debt-free one day, only some do.

So, while some debt is understandable, like your mortgage, you need to make it a point to pay off your high-interest credit card debt as soon as possible.

As you sit on a balance, the amount you owe keeps growing or barely goes down when you make a payment. Over time, this creates a $100 turn into a $500 purchase when considering interest.

Take a few minutes and write down your credit card debt and organize it from smallest balance to most significant.

Then pay the minimum on everything except the smallest amount. For this one, pay as much as you can. Once you pay it off, put that amount towards the next smallest balance and the minimum you were paying.

Repeat until all your credit card debt is gone.

#9. Keeping All Of Your Money In Your Checking Account

One of the most significant issues with lacking wealth is being lazy.

In this regard, laziness is not taking 5 minutes to open a savings account to put money into.

Not keeping all your cash in a checking account is because you will want to spend it.

Very few people look at their checking account balance and say, “Of this $5,000 balance, $3,000 is savings, so I can only spend $1,500.”

Instead, most people will treat the entire amount as being able to be spent.

Take the time to open a savings account and then regularly move money into it to have money for emergencies and other short-term needs.

#10. Not Investing Your Money

Investing in the stock market can be scary, but you must overcome that fear.

Earning low-interest rates in savings accounts is excellent for emergencies and short-term savings, but you are losing out if you do not invest that money for long-term savings.

Sure, you don’t risk losing your money in the bank, but as the cost of living increases, your interest is barely keeping up with inflation.

This means when you go to retire, you will have a difficult time making ends meet.

The good news is investing is simple when you follow the right advice.

#11. Not Understanding Time

Time is critical when it comes to long-term financial success. The sooner you start saving for retirement, the better off you will be.

This is because you can save a small amount each month starting in your 20s and end up with over $1 million.

But wait until you are 50, and you need to save hundreds, if not thousands, per month.

Another issue is many people who put off saving see how much they need to save every month for retirement and give up without starting.

Even if you only have 15 years to save, that is better than nothing. While you might not end up with $1 million, you might end up with $400,000.

Would you rather have $400,000 or $500 for retirement?

So, if you take anything away from this, at least know you need to start saving right now.

#12. Not Learning The Basics of Personal Finance

You don’t have to get a degree in finance, but knowing the basics of finance is critical.

Having a solid understanding of fundamental ideas and concepts can prove to be immensely beneficial in safeguarding against a multitude of mistakes and enabling you to make more innovative and informed decisions when it comes to managing your hard-earned money.

By equipping yourself with this knowledge, you empower yourself to navigate the complexities of financial choices with greater confidence and precision, maximizing the potential for long-term financial success and security.

#13. Student Loans For Low-Paying Career Paths

One of the most common mistakes made by those trying to escape poverty is taking on student loans for a low-paying career path.

It’s easy to get caught up in the hype of a college education and think it will be a one-way ticket to success, but this isn’t necessarily true.

If you choose a career path that doesn’t pay well, you could end up in a worse financial situation than before.

Instead of taking on debt for a degree that won’t lead to higher-paying jobs, consider looking into apprenticeships and other hands-on learning opportunities.

These are typically free or low-cost, providing valuable experience without debt burden.

#14. Buying A House Too Soon

Another mistake many people make when escaping poverty is buying a house too soon.

Buying a house is a significant financial decision and can be one of the best ways to build wealth over time, but if you’re not financially secure, it could be a recipe for disaster.

Before making such a large purchase, ensure that you have saved up enough money for a down payment, have an emergency fund in place, and have no debt.

Only then should you consider buying a house.

When done responsibly, buying a house can be one of the best investments you can make, but if done too soon, it could leave you worse off than before.

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