Everyone has made a few money mistakes — this is nothing to be embarrassed about. But sometimes, these mistakes can have lasting consequences. For example, using a credit card too much can result in massive debt that takes years to repay. But even if you've made a few money mistakes in your day, you can learn a lot from the financially savvy. Here are seven mistakes that financially savvy people don't make.
Organization is key to avoiding some money mistakes. If you're not organized, you might forget about due dates, which can trigger additional fees and a damaged credit score. Financially savvy people have a system for paying their bills. They open statements as soon as they arrive, and they make a mental or physical note of each and every due date.
It's an ugly word and most people don't want to think about a budget. But if you're looking to get your money on track, a weekly or monthly budget is crucial. A budget or spending plan can help you decide the best ways to spend your money. Likewise, you're able to track where your money goes each month. This ensures that you have enough to cover all expenses.
Credit card companies and banks make mistakes all the time. Additionally, identity theft can happen to anyone. If you don't check your bank and credit card statements on a monthly basis, you may overlook fraudulent charges or bank errors. These issues can be costly and add up over time.
I understand that it's difficult to save money in a tough economy. But despite the challenges, saving money should be a priority. Building a sizable nest egg can help you survive a financial crisis. Plus, the sooner you start preparing for retirement, the more income you’ll have in your later years. Set aside 5% or 10% of your pay each month, and then talk to your employer to see if you're eligible for a 401(k). If not, start an IRA with your bank.
Everything eventually goes on sale. Financially savvy people know this, thus they know how to exercise a little patience. Whether you're shopping for clothes, electronics, toys or household items, always wait for sales and compare prices among different retailers.
Despite economic troubles, some people refuse to downsize in order to save face. Unfortunately, impressing friends or family doesn’t benefit our bank accounts. Financially savvy people are more concerned with keeping their finances on track, and they couldn't care less about keeping up with the Joneses.
In addition to not keeping up with the Joneses, financially savvy people don't let others control their finances. These people might do well financially and are able to afford nicer homes and cars. However, they would rather live below their means and save.
So, how do your money habits compare with the financially savvy? At the end of the day, it's all about maintaining control over your money and making wise financial decisions. Some of us didn’t learn good money management from our parents, but that doesn’t mean we can’t adjust our thinking and move forward.
What tips have you learned from a financially savvy person?