3. Credit Balance versus Bank Balance

One of the most common mistakes is not understanding which aspects of your finances are costing you the most money, and not understanding the correct placement of your money to minimize the amount of interest you have to pay.

For example, say you had a credit card balance of $800, and $800 of savings in a bank account. You might think that it would be better to keep your savings untouched so it can earn you interest, but the interest you incur on your credit balance will far outweigh the interest you receive on a bank balance. This means you will pay less much interest if you pay off your credit card balance fully with the $800 in savings. The mistake in this case is thinking that maintaining a positive savings balance is better than reducing a credit balance. The savings might look nice in your bank account, but looks can be deceiving.