mistakes to avoidThe whole world talks of the USA, as a culture of consumption, where everyone lives “on credit”. Approximately 9 Americans out of 10 depend on their mortgage, student or some other types of consumer debts with high-interest rates. As a result – a huge economic crisis which causes the economic recession and a jump in saving rates.

Nowadays, those who are used to live beyond their means, have to tighten their belts and think of some good strategies to prevent an economic hardship, when you would hardly make ends.

This article is devoted to 23 most common financial mistakes you can’t afford yourself to make at any time of your life, whether you’re already facing a few financial problems or still remaining economically stable.

Don’t be one of those Americans who make silly money moves all the time. Prove that we can succeed financial independence. Let’s see if you can recognize yourself or your family members in this article post.

1. Careless Spending

It seems like your morning tradition of drinking a cup of $5 Starbucks coffee (by the way, here know how to save money in Starbucks), purchasing another pack of cigarettes or stopping for a lunch with your friend after work won’t make any difference to your budget, but if you add them up, you can be surprised how much is being spent on some excessive purchases. Remember: going through hardship means counting on every dollar, which can be contributed to your mortgage payment or anything else.

2. Useless Payments

Cable television, radio, video games, a coffee machine – how many of those are you really in need of? And now, remember how much money you’re paying for your monthly bill. Maybe, it’s the right time to get rid of those unreasonable items and start living more frugally?

3. Having No Idea Where Your Money Goes

Having your spending out of control makes it impossible to figure out where and how the money simply evaporates from your wallet. Start a notebook, keep detailed lists of all your current expenses, save receipts and then you’ll finally realize how many things were just unnecessary and completely forgettable purchases.

4. Not Assembling a Budget

By budgeting, we mean keeping track of your spending to find out what in the average amount of money spent for each “category” (meals, utility bills (for instance, you can learn how to save money on cell phone bills), shopping etc.) per month. After all, regular budgeting helps taking control of your monthly spending and tighten it up in the case of necessity.

5. Using Credit Cards too Often

When people use credit cards to pay for every single spending they make, they should get ready for double-digit interest rates. We know it’s tempting but don’t get depended on your credit card or else you’ll likely to spend more money than you actually earn. We’ve covered this question in our post about worst financial mistakes people keep on making. But we will continue talking about the basics until you learn to manage your personal finance well.

6. Purchasing a Car

how to buy a carIf you’re thinking that right now you can afford to buy an automobile, then basically you ought to have the whole amount in hands or else you just can’t afford it. Relying on your loans again means paying huge interests where you lose quite a bunch. Although, if buying a car is a matter of a real necessity, then at least try to stay frugal and select the low-cost option. Remember that the car maintenance is also a huge piece of your already tight budget. Consider checking car parts costs for the model you like. In other cases, look for other means of locomotion.

7. Purchasing a Huge House

Why would you really want to have a 6,000-square house if there are three of us living together? Large houses do only mean larger utility bills, taxes, and other useless expenses. Is sacrificing thousands of dollars really worth it? Besides, smaller house means smaller mortgage loan. If you are currently looking for a house, consider Personal Money Service as your mortgage loan provider online.

8. Make Ends From Paycheck to Paycheck

Did you know that household saving rates in the US are much lower than any other European countries? When the American rate is below 1%, Germany, France or Italy savings rates, according to the OECD Facebook 2005, are on average 10%? Living on your lowest a week before your next paycheck comes, isn’t a good strategy in times of our current crisis when things are unstable. Think of this number: there are 50% responsible Americans who have emergency funds! It’s all about smart spending and setting priorities.

9. Paying When You Can’t Afford It

Think twice before you decide to add up another debt to your “collection” – the fact that you’re able to make payments doesn’t mean that you’re able to afford the purchase. Just make sure you don’t spend the whole money on paying off credits without having an opportunity to save. Besides, there are various debt settlement programs online that can be really handy.

10. Be Frugal When Investing in Yourself

We don’t talk about having your nails done or have a monthly haircut, but rather about investing in things that could bring you prosperity later. Those include education, attending seminars, courses, investing in your business (if you have one). These ones will definitely contribute to your wealth later.

11. Spending too Much on Entertainment

spedning money on entertainmentHow many of people do you see at a local bar in regular Friday or Saturday evening? Most of them just wastefully spend their time and cash on entertainment, not realizing that a rich man would not spend the half of his income on things that don’t contribute to his plans and dreams.

12. Not Opening Yourself to a Spouse

Thinking as if you’re the only one who should take care of your finances is an absolute misconception. Once you’re able to disclose your financial precepts for the loved on, thoughts about overcoming things with a help of somebody else would always be encouraging.

13. Mortgaging Your House

Rich people can afford to purchase their homes without any mortgage, but what if you don’t have million dollar savings for buying a house? Our advice: rent an apartment until you’ve saved enough for buying the house in cash or else be ready for endless refinancing, paying off constant bills and inflation. Otherwise, you can turn here for assistance.

14. Saving for Retirement

Trying to save cash for your good retirement means, you’re not using your money smart. Instead of all of this, you should rather invest in your future prosperity and build wealth before you get retired. Check how to save a million dollars for retirement.

15. No Plans for Emergency

What if you’re suddenly dismissed or forced to move to another city? Do you have an emergency fund prepared? Do you have an insurance? It’s better to take care of things before they actually occur or else you risk to be crawling out of the debt for the rest of your life.

16. Purchasing Odd Goods

Each of us does really enjoy buying something on sale or what is truly cheap, but having a habit to always opt for inferior and poor-quality goods isn’t rationally. You can buy a set of dishes in the dollar store, which won’t last for longer than 3-5 months and then you will have to replace it again, or you can choose a $50 china set that will serve you for years.

17. Lack of Appreciation

Surprisingly, appreciation and enjoyment of your money is something that’s characteristic of rich people. They believe: doesn’t matter if you earned, $100 or $1,000, you won’t be able to earn more unless you learn to enjoy and appreciate the one that you already have.

18. Not Saving

Saving at least tenth of your earnings is definitely a wise decision, which prevents from taking high-interest-rate loans and credits. And don’t blindly spend your extra money just because you have it.

19. Working for Money but not Vice Versa

Unless you start working on providing better service or producing better products instead of thinking of income, there’s no way you will earn much more from what you do now. Therefore, see for yourself and stick to the rule of rich people to never work just for money, but rather vice versa.

20. Buying Staff to Impress Others

Remember “Fight Club” and the quote: “We buy things we don’t need wit money we don’t have to impress people we don’t like“? People like expensive goods to show off that they earn enough to afford themselves buying expensive watches, drive luxurious cars and wearing designer clothes. The truth is, sometimes people save for months and years to buy something more prestigious than everybody has. Don’t be anybody else and leave attempts to seem cool.

21. Believing Frugality is Boring

Many people consider they would behave like Ebenezer Scrooge if they act frugally.  However, this is an obvious misconception. In fact, buying cheaper corn flakes or installing energy efficient light bulbs instead of regular ones wouldn’t make a huge difference in your life routine.

22. Being Dependent from Parents

Keeping up with your life in the early 20s is quite a challenge. Entry-level paychecks don’t leave you other choice but tightening your belt really tight. Asking for some help would be fine although once you’re 30, consider of solving your financial difficulties on your own. Believe us: it’s possible.

23. Skipping Health Insurance

Being young means being healthy, but youth, unfortunately, doesn’t last until the end of your life and seeing a doctor one in a year at the end of your 40s can result in regular doctor’s appointments. And don’t be surprised with your bill, when this happens, because years ago you refused to do your health insurance. Therefore, be financially wise and take care of your insurance now.