Guest Post: 4 Common Money Mistakes (And How to Avoid Them)
January 29, 2013 by Laura Edgar, NerdWallet
Despite your best efforts, do you seem to run out of money every month? You may think you’re doing everything in your power to save, but as you’ve probably learned, it’s not that simple. In fact, your overspending may not have anything to do with amount of effort you’re putting in. It’s time to look at your spending habits in a new light. Here are four of the most common money mistakes and some realistic strategies for avoiding them.
Mistake 1: Taking on too much credit card debt
Credit cards can be great. When used correctly, they’ll help you build your credit score and make safer transactions online. However, they’re easy to misuse because you have the option of making a minimum payment each month, rather than paying off your entire bill. It might seem convenient to do this once, but it’s better to just not do it at all. Each time you put off making a full payment, you’re accumulating interest on your total balance. You’ll eventually have to pay back all the money you spent in the first place, and then some. Think of it this way: you’re going to have to pay $1 for that candy bar regardless. Do you really want to pay an extra dollar for it? That dollar could be earning interest in your savings account, or you could use it to pay other bills.
Mistake 2: Unused subscription services
Subscriptions can save you money, but you need to use them regularly to make them worthwhile. Be honest with yourself: are you really going to the gym 2-3 times a week? Well, maybe you should be, but if you’re not doing it right now, don’t pay for the monthly membership. It might seem more expensive to buy a day pass, but this might be a perfect temporary solution until you get in the habit of going regularly. If you end up going enough to justify the monthly membership, you can always switch back. If you’re looking for other ways to save money, consider eliminating subscription services that aren’t essential to your well being, like cable TV or magazines. Sure, you may miss them, but you can always use the Internet to catch up on your favorite TV shows or read articles.
Mistake 3: Being hit by fees
Whenever you open a new account, buy a new product, or perform any kind of monetary transaction, always check for fees. There’s nothing worse than making a transaction and finding out after the fact that you have to pay a fee. You can always avoid fees by planning ahead. Take out-of-network ATM fees, for example. Familiarize yourself with Triangle Credit Union’s surcharge-free ATM network, or withdraw your cash before you travel, and you’ll save yourself the hassle of a transaction fee.
Mistake 4: Not leaving wiggle room
A budget is just like life: if you expect perfection, you’re setting yourself up for failure. It’s better to make room for unexpected expenses in your monthly budget. Even if you’re able to resist your normal temptations, you may have to go to the doctor or pay for a parking ticket. Life happens.
Laura Edgar, NerdWallet