Most people know about the biggest financial mistakes, like racking up a lot of debt, not having a budget, and spending money frivolously. But even if you know not to make the common financial mistakes, chances are that you (like all of us!) fall into other financial traps.
Here are six costly financial mistakes that you could be making. The good news is that not making these mistakes can improve your financial security while also making your money go even further!
- Not Paying Yourself First
We all know the importance of paying bills, and if you’re like most people, you’ve set up auto payment to ensure that you’re never late. But when is the last time you paid yourself?
If you’re good at managing your money, odds are that you have money left over at the end of the month. Having leftover money, even if it’s just $50, shows that you’ve stuck to your budget and been disciplined in your spending.
Along with using auto payment for your bills, set up an auto-deposit that puts money into your savings account. It’s even better if you can put funds into an investment account each month. When money is out of sight and out of mind, you can’t spend it, which only benefits you in the long run.
- Not Having a Financial Advisor
Even if you’re in the best financial position that you’ve ever been in your life, it never hurts to have a financial advisor. While professional financial help is priceless when you’re facing money troubles or need help creating and balancing a budget, a financial advisor can be helpful even if you’re financially healthy.
The right financial advisor can create a plan to help your money grow and to ensure your financial stability in the future. This means professional help with investing, stocks, and ways to maximize earnings on your invested funds.
Most banks and credit unions offer financial advisors. You can also compare the best financial advisors in Miami using an online tool that finds local professionals in your area.
- Not Shopping Around
The retail industry is run by consumers. In a world where you have so much power, it never makes sense to pay full price for anything. There are so many options to save money on products. Couponing has become easier than ever, with a growing number of businesses offering digital coupons and e-coupon codes that can be used online and in-store.
Other ways to save money when buying things include:
- Using cashback apps
- Comparing prices online before buying
- Taking advantage of a rewards program
Knowing how to save on everyday items such as groceries and clothes can save you tons of money throughout the year.
- Ignoring Your Credit Score
Most people only care about their credit score when it’s time to apply for a loan. Whether you’re planning to borrow or not, it pays to keep close tabs on your credit score. Having a good credit score not only looks good on paper, but it can also save you thousands of dollars in interest charges.
The higher your score, the lower interest rates you’ll be approved for. This means when it comes time to buy a home, a car, or to take out a personal loan, you can guarantee that you won’t be stuck with a double-digit interest rate for years to come.
There are many ways that you can see your credit score and review your credit report for free. In fact, most lenders offer free credit monitoring that allows you to track your score. Banks such as Chase and Wells Fargo offer these services at no cost!
Also, remember that once a year you’re entitled to a free credit report from each of the three major reporting agencies.
- Paying Unnecessary Fees
Fees are one way that banks and lenders are able to make money. Be diligent about avoiding some of the most common fees such as late fees, ATM fees, balance transfer fees, and checking account fees. At the same time, you also want to be aware of other fees that you may not know about.
If you invest your money, be aware of annual investing fees. You’ll also want to pay close attention to fees that you’ll pay once it’s time to retire.
- Not Re-Evaluating Your Financial Situation
A common mistake that we all make is not re-evaluating our financial situation, especially after a big life event. Maybe you’re expecting your first child or maybe you’re buying a home. Or maybe you’ve landed a new job that means more money!
Whatever the scenario may be, make it a habit to re-evaluate your financial situation on a regular basis. It’s also worthwhile to evaluate after you meet a financial goal. If you’ve finally paid off your student loans, reconfigure your budget to put that money elsewhere, such as into a savings account or towards paying off another loan.
By knowing about common and uncommon financial mistakes, you can save money now and in the long run. Keep these mistakes in mind so that you can further improve your financial standing.