I have to say, I may not be the best with money, but there are some money traps that I try not to fall into. When it comes to money mistakes to avoid, there are some glaringly obvious ones that are so easy to dodge, but that so many of us continue to make. Today I wanted to share eight money mistakes to avoid, and what you should do instead!
Not checking bank statements
I don’t know why…but I hate checking bank statements. In fact, in the past, I would do everything within my power to avoid looking at them. I’m pretty sure I’m not alone in this.
However, the problem with not checking bank statements is that you really have no idea what you are spending on what until you do. And you won’t be able to spot unknown or bogus transactions either (we have been known to catch a few people skimming off our account).
Remember knowledge is power so a quick check – say fortnightly – or if you can brave it even weekly – will be worth the extra effort and pain.
Not paying off debts and saving instead
Yes, you may feel like you’re winning by saving instead of paying off debts but if you have debt then you should always pay off that debt first before saving. Why? In a nutshell, it’s because debts usually cost more than savings earn, which is why you should prioritize clearing your debts first before you think about saving.
Not reviewing your direct debits
The problem with all those direct debits is that they rely on you being complacent and never doing anything about them. So it’s all too easy for a direct debit to keep nudging up in cost year on year.
To avoid this money mistake and ensure you are not paying over the odds, be sure to review your direct debits every six to twelve months as that’s how often companies tend to review them.
Not canceling your subscriptions
Have you noticed how everything is becoming a subscription? It may seem like £19.99 such a month is a good idea for a meal delivery/audiobook or music streaming service or beauty subscription or whatever it might be.
But the problem is that all these seemingly affordable outlays all add up and before you know it you have become the victim of subscription creep. All of this is bad news for your budget! To avoid this money mistake be ruthless with your subscriptions and cancel those which are not providing more value than they cost.
Not switching providers
Once upon a time, a customer was rewarded for sticking with a particular supplier. These days, it feels like you’re been penalized for that same loyalty. Sad I know but a very real concern when it comes to potential money mistakes.
The simple fact of the matter is that it pays to switch. Use sites like Compare The Market to research different tariff types and how they could help save you money.
Taking out unnecessary insurance on items
Nobody wants to be underinsured in life (I have experienced that particular nightmare first hand). But did you know you can actually be over-insured?
For example – although it can be tempting to take out separate phone insurance – you may be wasting hard-earned cash on being over-insured because your phone is covered by home contents insurance. Always check what is already covered under your existing financial products before taking out additional insurance.
Buying things you don’t have money for
It’s the 64 billion dollar question – why do people spend money they don’t have? We all know that everything costs money – from the minute you wake up life is proof of that. But it’s when you start spending money you don’t have that things start to get problematic. Spending money makes you feel good, and is a way of keeping up with the Joneses.
But spending money you don’t have leads to one place and one place only – debt central. Instead, create a budget that includes room for maneuver with a spending budget and then stick to it. It also helps to question whether you really need the product of service in question before buying it.
Not having a safety net – aka emergency fund
Life can throw us some curveballs can’t it? It’s the unexpected vet bills, or your car repairs, or your boiler breaking down. Whatever the reason, an emergency fund will ensure you have a safety net for those times when you get slapped in the face with a cost you weren’t expecting.
An emergency fund will also help to stop you from getting into debt when the inevitable happens by preventing you from falling behind in payments and potentially getting a bad credit score. However, in the event of that happening, there are companies like Money World which specialise in bad credit loans.
Which of the above money mistakes are you guilty of making? Do share in a comment below.
*This is a collaborative post