July 24, 2018

3 Money Mistakes Everyone Makes — But You Don’t Have To

Simple. Thrifty. Living.

There are some money mistakes that practically everyone makes at some point during their lives. By learning about these popular mistakes, you may find that you can avoid them. Even if you can’t avoid making the same mistakes, at least you can learn smart ways to avoid a small mistake from turning into a big problem.

Most people get their first credit cards when they’re 21 years old. It’s no wonder why so many people accumulate credit card debt. When you’re not old enough to build a cash reserve, the slightest financial emergency can force you to carry a credit card balance. Once you have revolving credit, it’s hard to eliminate it.

If you find yourself living with credit card debt, then you must commit yourself to paying more than the minimum each month. As long as you put as much toward the debt as possible, you can get back to a zero balance within a reasonable amount of time.

Creating a budget is the first step toward financial security. Without a budget, you don’t know whether you’re working toward your financial goals, which means you’re almost certainly not heading in the right direction.

If you don’t already have a budget, set aside 50 percent of your income for essential costs such as:

  • Rent or mortgage payments.
  • Groceries.
  • Utilities.
  • Car payments.
  • Any other essential things that you cannot live without.

Then, dedicate 30 percent of your income to lifestyle costs. Lifestyle costs include things like going out to eat, seeing a movie at the cinema and taking vacations.

Finally, allocate 20 percent of your earnings to your financial goals. Financial goals differ from person to person. Some common goals include:

If you don’t have a budget, then you’re not tracking your spending. Just because you have a budget, though, doesn’t mean that you’re tracking your money well.

Luckily, you don’t have to track your money by hand anymore since there are plenty of apps that will do the job for you. Some popular apps that will help you track every dollar that you spend include:

  • Personal Capital
  • Mint
  • You Need a Budget
  • Tiller

Most of these apps will let you synchronize your account with several family members. If you have a household budget, then you should choose an app that lets multiple people connect to the same account. Otherwise, you can only count some of the money that your household spends.

You’ll probably make some money mistakes in your life. If you learn from the mistakes of others, though, you can potentially avoid the mistakes or minimize the damage.

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