At some point, we all make financial flops. But you don’t have to let it haunt you or continue to make the same money mistakes. Listed below are top four personal finance mistakes that we all have made at some point in our lives.
Under budgeting and overspending. After you’ve pulled out all the loose change from under your couch cushions, you’re left in search of extra money to cover this month’s bills. So, what three obvious signs will your bank statement suggest if you’re overspending? If, you are likely maxing out your credit cards, only paying your credit card minimums, and your credit card balances exceed monthly income. Admitting there is a spending problem is the first step in regaining control of your money. Tip: print out your monthly statement to review your spending habits. From there you can create a current budget plan and a future budget plan that includes a list of financial goals. Continue this even after you have met your monthly target spending, as proper money management will only allow more cash in your pocket.
Underestimating your 401k. Financial experts suggest that participants, specifically millennials, aren’t saving enough for their golden years of retirement. But it’s not their fault. Preparing for retirement can be overwhelming and daunting for any of us, especially if you are struggling with the increasing costs of living and drowning in student loans. Studies report that college debt is now the number one reason college grads postpone dumping their last penny into a long, lost retirement fund. Tip: ask your employer if they price match. If they do, take advantage of this benefit by contributing the minimum to meet your employer match. If you can, you're not missing out on free money.
Skimping on savings. As a rule of thumb, experts believe that you should have at least three to six months of living expenses for all of the “what if’s” such as a company layoff, for example. These expenses should cover the cost of rent, utilities, gas, food, and emergencies. Tip: Open a savings account that is inaccessible to online or mobile banking. This reduces your temptation to transfer money and spend. With every paycheck, contribute a reasonable percentage into your account. Over time, you will be amazed at how much you can save for a rainy day.
- Under insured. Having too little coverage on your policies could be a huge financial mistake in the event of injury or damage, especially if your life insurance coverage is lacking. Going without enough insurance or any at all could be catastrophic to a family financially. Tip: To ensure you have adequate coverage, reevaluate your policies as circumstances change, not just when the policy is renewed.
For more information on avoiding these common mistakes, consult with a financial advisor. It’s not always easy to own up to our mistakes, so make the time to determine whether you’re overspending each month and how to keep your money in check.