With the economy in a recession, the stock market through the floor and foreclosures kicking people out of their own homes, there have been a ton of financial mistakes made in the past few years.
The situation is so bad that, even if you’ve made all the right moves, you’re feeling the effects of everyone else’s mistakes.
While you can’t fix the economy on your own, you can ensure that you don’t make the types of mistakes that got us into this mess.
Your personal situation can be steady. Here are 10 money mistakes you can’t afford to make.
- Not Paying Yourself First
You pay your credit card company. You pay your mortgage lender or landlord. You pay your cell phone provider. Why aren’t you paying yourself? By setting automatic transfers from your central checking account into an ING Direct savings fund, you pay yourself every month.
- Trying to Time the Market
When you’re investing, trying to time the stock market is a loser’s game. Your best option is to set aside a certain amount of money to invest each month, dollar-cost averaging so you buy more when prices are low and less when prices are high.
- Increasing Your Debt, Not Your Net Worth
The only way to get rich is to increase your net worth. When what you have far outweighs what you owe, you’ve got it made. The more debt you rack up, the lower your net worth is going to be.
- Forgetting to Pay Your Bills
There’s no excuse for forgetting to pay your bills (and potentially racking up late fees). Set your bills to be paid automatically each month, and you won’t have to worry about remembering to write that check.
- Not Saving for Emergencies
If you’re not prepared for the unexpected, you’ll be completely off-guard when something happens. When an emergency happens, the last thing you want to worry about is if you have the money for it. With an emergency fund of 3-6 months, you’ll feel fine.
- Being Clueless About Where Your Money is Going
If you don’t know where your money is going, there’s no way you’ll understand your spending habits. By setting up an online budget and tracking your expenses, you can see exactly what you are spending money on.
- Not Setting Aside for Once-in-a-while Expenses
Everyone has those expenses that creep up every so often: insurance, taxes, memberships and more. By setting up an ING Direct account designed solely for these once-in-a-while expenses and automating 1/12 of your total costs each month, you’ll have the money ready when those bills come due.
- Living Beyond Your Means
It’s not worth keeping up with the Joneses when — you guessed it — the Joneses are broke. Spend only the money you have and avoid situations that will cost you more than that.
- Paying Too Much for Anything
When you’re shopping for anything — a home, a car, or even groceries — do the research to find out the best price you can get. Hop online and compare prices before you go out to buy. Like the Boy Scouts say, “Be prepared.”
- Treating Money as the End Goal
Having money is great, but it’s not the reason you work. Remember: money is only as good as what you can do with it. That doesn’t mean you should go out and shop ’til you drop, but treat money as the vehicle to achieve your goals — not the goal itself.