10 Money Mistakes to Avoid

Navigating your finances can be tricky, and nobody is perfect when it comes to handling their money. But, to help you build a healthier financial future, we’ve identified 10 common money mistakes which you can avoid!

1. Getting into debt.
   

Having debt can put a strain on your finances as well as your physical and mental well-being.

While you might be eager to take out a credit card to boost your credit score, this has to be done in the right way as it can also lead to unmanageable debt which quickly spirals out of control. For instance, if most of your money is going towards credit card repayments, you might fall behind on other financial commitments such as phone bills, gas bills, and mortgage repayments.

If you accumulate an overwhelming amount of credit card debt (which you cannot repay) you’ll damage your credit score even further. However, don’t panic if you are struggling with debt, you’ll simply have to work out a manageable plan which will allow you to pay it back.

Also, it’s important to carefully consider whether taking out a credit card or loan is right for your unique situation. So, if you’re considering a loan, here are 5 questions to ask yourself first.

2. Shopping in the sales

While searching for deals is a great way to save money, you’ll want to carefully consider whether the purchase you’re about to make is wholly necessary. The allure of sales can coax you into spending unnecessary money, which could have been put to better use in your savings pot!

For instance, if a deal causes you to buy something you otherwise would not have purchased, you are just spending money, not saving. So, before going shopping, be mindful about what you actually need and will get use out of. You’ll find that you’ll save yourself lots of money (and wardrobe space).

3. Too many takeaways

Dining out or ordering too many takeaways can take a huge chunk out of your monthly budget. While it might be tempting due to its convenience, nine times out of ten, you should go for the more cost-effective option and cook your meals yourself.

You can start small and prepare a few home-cooked meals a week instead of eating out. Then build up to where you cook most of your meals yourself! Bonus points if you meal prep and batch cook so you always have a quick and easy meal to hand.

You’ll find that you’re saving a lot of money each week, and you’ll reap the benefits of nutritious, home-cooked food too. Over the years, you’ll save thousands of pounds by making the health-conscious and money-conscious switch.

4. By-passing great job opportunities

Many people underestimate their abilities when it comes to finding work.

Often, employers are not looking for candidates with the perfect resume. There are many ways to get a great position, and personality and perseverance count for a lot. If you do not have the exact qualifications, education and related experience can both work in your favour. Instead of thinking, I will never get this job, start thinking, what is the harm in applying?

You should keep in mind that you have a lot to offer in the workplace, and self-belief can go a long way when it comes to maximising your finances.

5. Always buying in bulk

There is a common misconception that it is always cheapest to buy in bulk. When you buy your groceries, toiletries, and paper goods in bulk, you usually pay a lower price per unit. But you don’t want to over-purchase and waste products and money.

So, why not adapt your habits, and instead of always using paper towels to clean surfaces, opt to use rags and cloth towels instead? Reducing paper consumption can save you lots of money yearly.

While buying goods in bulk can save money in the short term, it can also prevent you from finding creative ways to save. Instead of finding the best deals on common goods, take some time to consider if you truly need the goods.

6. Not having a budget

Failing to create a budget negatively impacts many people’s finances, as having no set plan can lead to frivolous spending and subsequent financial instability.

A popular budgeting hack is to put 50% of your money towards your needs, 30% towards your wants, and 20% towards your savings. You’ll also want to review your budget regularly and adjust it according to your evolving lifestyle. Why not take a look at our guide on the best budgeting apps before you get started on creating yours?

Establishing an effective budget will allow you to put some money aside for savings as well as an all-important emergency fund.

7. Living beyond your means

While it’s undoubtedly important to set aside money for enjoyment, there’s a fine line between budgeting for fun and spending beyond your means.

You’ll want to avoid impulse spending and ensure you keep your spending habits in check by keeping track of how much money you’re going through every month. As mentioned, applying for credit cards, and spending more than you’re earning can cause you to wind up in a spiral of debt.

But, if you budget effectively and prioritise healthy financial habits, you’ll be able to set aside a realistic amount to spend on enjoying yourself each month!

8. Failing to plan for the future

If you neglect to plan in advance, you’re setting your future self up for failure. That’s why paying into a pension is a fantastic idea, as you’ll be able to give yourself the gift of a comfortable, financially secure retirement.

It’s never too late to start saving, so why not begin paying into yours today? There are multiple options when it comes to pensions, such as state pensions, workplace pensions, and private pensions.

A top tip when it comes to maximising your pension is to make early and consistent payments. We’ve got a guide on how to maximise your pension which has many more handy insights.

9. Ignoring financial education

Education is key to building healthier finances. So, you should make a conscious effort to invest time into learning about money.

A lack of financial literacy can make it much more difficult to make decisions which are going to benefit you and your family. So, ensure you’re clued up on the intricacies of everything from saving to investing and effective budgeting.

You can boost your knowledge by talking to others, therefore make sure you’re talking about money openly and honestly with family and friends.

10. Not setting goals

Setting goals is vital for anyone who is looking to take charge of their finances. Whether you’re aiming to pay off debt or boost your savings, goal setting is something you’ll have to master!

Failure to establish goals leads to complacency. So, you’ll want to sit down and write up a realistic plan. If saving is your top priority, why don’t you create a visual guide of how much you’re hoping to save to boost your motivation? We’ve got plenty of helpful savings insights in our guide: how much can I save in a year?

By avoiding these common money mistakes, and practicing healthy financial habits, you’ll be able to build a solid foundation for prolonged financial stability.