Once you finally land that job, or once your business takes off, you’ve got it made, right? The money comes in, you spend it, and you’re set for life.
Not quite. Since our schools do not offer even basic classes in how to handle money, we’re left pretty much on our own. Studies have shown that we mirror our parents financial habits, sometimes from their specific tutoring, sometimes through osmosis. If they’re rich and financially savvy, great. We learn from them the pitfalls that one can encounter on the road to financial security. If they’re not wealthy, it’s up to us to navigate the minefield that is sound money management.
Billshark, however, is on your side, and we would like to give you a few tips on how to avoid the biggest money mistakes people make.
There are numerous missteps that fall within this category, from buying more house than you can afford, to trying to impress friends and/or co-workers, to carrying too much credit card debt, to believing there are just some things you can’t do without.
The hard fact is, you must learn to live within your means. If that means you don’t have the latest gadget, oh well. If that means you get your clothes at Goodwill instead of Bergdorf Goodman, so be it.
But it gets worse. You may have to live in a less-desirable part of town, or drive a 10-year-old car, or even find other, cheaper ways to get to work and sell the clunker. It’s all about priorities, which we’ll discuss below.
One of the biggest drivers of overspending is tying your self-image—or worse, your self-esteem—to how you appear to others. The fact is, if others’ opinions of you are dependent on what you wear or where you live or what you own, they’re not worth trying to impress.
You must accept that material things have absolutely no correlation to your value as a human being. Once you learn that, you can be quietly and smugly proud of the fact that your finances are in shape, whereas others will be paying on that new sports car for years as it quickly depreciates.
2. Failing to budget
In your profession, whether you’re self-employed or working for someone else, you must budget your time efficiently in order to successfully perform your job. There’s only so much time in the day, and if you fritter it away without planning, you’ll find yourself in big trouble.
In the same way, you must budget your money, or you can end up bankrupt, or even destitute.
If, as we discussed above, you have come to grips mentally and emotionally with exactly how much money you have to work with, then comes the task of apportioning it so it will last you for your lifetime.
There are numerous avenues for helping you plan a realistic budget, many of them free or low-cost, depending on how much capital you have to work with.
The important thing is to take the time to plan out the priorities in your life, and decide where to put the money you have available. And be sure to account for the unexpected: accidents, medical bills, job loss, car repairs, hurricanes or the like. Which leads us to the third major money mistake.
3. Failing to save
This is the hard one, especially if you feel you don’t have one extra cent to put away for the future. But one of your priorities must be to save, even if it’s only $10 per month. At least you’ll have something. If you’ve resisted the lure of overspending to keep up with the Joneses, and you’ve created a workable, viable budget, then putting away something for short- and long-term emergencies as well as retirement should come easily to you.
The most painless way to save is to never see the money in the first place. If you have a 401(k) plan at work, you can have the money deducted before you ever see your paycheck. Or you can have your bank automatically transfer money regularly into a savings account. Either way, regular savings is the surest way to financial freedom down the road.
And of course, if you’re having trouble coming up with extra cash, let Billshark help you find some. It’s what we do, and there’s no one who’s better at it!